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Yes, Gap is thinking about selling on Amazon, but not right now

May 23, 2016 11:18 AM
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If you can’t beat ‘em, join ‘em. Or in Gap Inc.’s case with Amazon.com Inc., if you can’t beat ‘em, start selling through them.

On Gap’s fiscal Q1 2016 call with analysts last week, CEO Art Peck expanded on comments he made earlier in the week that the retail group, which includes  the Banana Republic and Old Navy brands plus  its flagship brand, is considering selling its clothing via Amazon. “To not be considering Amazon and others would be—in my view—delusional,” Peck said at the company’s annual investor meeting Tuesday in San Francisco. During the earnings call Thursday, Peck said selling online through leading e-retailer Amazon is an option under consideration but far from imminent.

“Amazon's presence in e-commerce is undeniable in this country,” he told analysts on the call, according to a transcript from Seeking Alpha. “In no way was I previewing a partnership; I'm just previewing the fact that we want to make sure that we're very situationally aware of what is going on with our customers and in the world.”

Gap, No. 20 in the Internet Retailer 2016 Top 500 Guide, does not break out online sales in its quarterly earnings reports, and executives did not detail online sales performance during the quarter. However, Peck made it clear to analysts that he sees the greatest opportunity for Gap in selling to shoppers via their mobile devices.

“Our customer today increasingly is on a mobile device, which means (we need to provide) a great mobile shopping brand and e-commerce experience,” he said, though he did not elaborate on Gap’s mobile initiatives.

Gap also said it is closing its 53 Old Navy outlets in Japan this year, ceding ground in the world’s third-largest economy to local-born fashion brands such as Fast Retailing Co.’s Uniqlo, No. 15 in the Internet Retailer 2016 Asia 500, and Ryohin Keikaku Co.’s Muji (No. 327 in the Asia 500). “I’m obviously disappointed that we’re going to be discontinuing operations, but I view it as a sign of a good company when you acknowledge that the business isn’t going to deliver and you make changes and move forward,” Peck said during the call. Gap is No. 104 in the Asia 500.

For the fiscal first quarter ended April 30, Gap reported:

  • Net sales of $3.44 billion, down 6.0% from $3.66 billion last year.
  • Net income of $127 million, down 46.9% from $239 million last year.
  • Year-over-year comparable sales decline of 5%.

Bloomberg News contributed to this report.

 

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