Early trading Friday following the company's announcement of strong Q3 results and revised full-year projection showed significant decline in Gap (GAP, Financial). The retailer linked the achievement to better operations over its banners and a strong beginning to the Christmas shopping season.
CEO Richard Dickson pointed out a comeback at Athleta, Gap's activewear company, which showed a 5% rise in comparable sales throughout the quarter. "This quarter, we reached an inflection point with a positive plus 5% comp and we're feeling increasingly confident in the trajectory of the brand," Dickson said on the conference call. Strong sales of basic products—especially bottoms—as well as limited-edition items helped to explain the success.
Analyst Lorraine Hutchinson of Bank of America (BAC) attributed Athlete's expansion to improved customer experience, creative product development, and strong marketing. For Gap during the pivotal holiday quarter Hutchinson's team forecasts a 5% equivalent sales increase.
As Gap shows rising strength in the sportswear sector, the company's Q3 success and Athleta's rebound could point to further rivalry for rivals like Lululemon (LULU).
