This year we’ve been covering the retail turnaround of Macy’s and Abercrombie & Fitch and the struggles of some other brands. Gap's brands faced their share of challenges in the second half of 2022 and throughout 2023. As such, it was nice to see the company's sales pop for its first quarter of 2024 under new leadership. In fact, it wasn’t just one of their brands that popped, it was all four. Old Navy and Gap delivered +3% comparable-store sales increases, Banana posted +1% growth, and Athleta saw +5% growth. Additionally, each brand showed improvement versus 2019.
Looking at the rate of change for traffic for each of the brands, we see a nice pick up for each of the major shopping seasonal events, as shown in the chart below. This tells us that the brands’ marketers are able to connect and drive demand; that indicates to us that the brand is still relevant with each of their customers and a good foundation to build upon. The better top-line was also paired with excellence in supply chain, inventory, and promotion leading to overall exceptional profitability and cash generation. Gross margin for the year should improve and reach levels not achieved in over 15 years.
We’d highlight Old Navy given that it’s the largest brand and with many different competitors (from H&M to Walmart and Target to off-price)–the chart below shows visit frequency up each month of the past eight, with “loyal visits” up +3.8%.
CEO Richard Dickson said the following on the retailer's turn: “We are on a journey to become a high-performing house of iconic American brands that shape culture but this will take time, perseverance and rigor...Each brand is at a different point in the process, but I'm encouraged by the improvements we're driving across the portfolio...At Old Navy, we are reasserting the brand and being more deliberate and consistent about how we express the brand, clearly communicating fashion and value for the family...In the first quarter, we continued to focus on driving strength in the Old Navy women's business, while also highlighting looks for the family through campaigns featuring spring colors and fabrications like linen. A key category for the brand is Active, where Old Navy is the fifth largest brand in the space...We have also made a concerted effort to build greater trust with our consumers through precision and clarity around the combination of storytelling and pricing with WOW prices in-store and online. We continue to test opportunities to enhance customer experience in the store through physical layout and new merchandising strategies. These actions are driving better consistency and experience, and the consumer is noticing, enabling us to win market share in key categories like Active and Dresses.
At Gap, we are reigniting the brand, working to deliver confident trend-right products, price right and expressed through big ideas and culturally relevant messaging. Linen Moves is a great example of taking trend-right product and amplifying it, turning it into a big idea expressed through compelling in-store merchandising and strong digital execution. During the quarter, we saw outsized results within this category with Gap linen sales up double digits versus last year. Building on this success and the continuation of the campaign new deliveries will include new colors and new styles as we aim to secure a leadership position in this important seasonal fabrication. While this campaign itself is encouraging, our focus going forward is on relentless repetition of these type of creative expressions. Collaborations also remain an important part of our brand strategy. The recent launch of our limited edition 51-piece collection with California clothing label DÔEN is generating buzz, driving both relevance and revenue for the brand. These examples demonstrate the progress unfolding through better storytelling, improved assortments and our stronger brand identity. Our stores are presenting a clearer brand narrative, and we're showing up for the customer with healthier in-stock levels.
Turning to Banana Republic. We are focusing on reestablishing this brand to thrive in the premium lifestyle space. The work to fix the fundamentals is underway, and we are starting to see green shoots in the first quarter with positive comp growth, a notable improvement versus the fourth quarter. Banana Republic classics and finest fabrics performed well, benefiting from foundational improvements, including increased product depth in stores, elevated marketing and better site execution. With the close of the first quarter, we decided to commence a leadership transition at the brand. We see a significant opportunity for Banana Republic and are working to set the stage for improved future performance under new leadership.
We are resetting Athleta, a brand with significant growth potential and a clear and distinct brand positioning rooted in the Power of She. Core bottoms performed well in the quarter, giving us confidence as we accelerate this loyalty gateway category. Brand heat and excitement were evident in the response to our limited edition drops. Our innovative fabric PowerMove successfully launched with train and run products contributing to the significant improvement in results in the first quarter. This year has been a major step forward for women's sports as female athletes globally are beginning to get the attention and credit they've long deserved. It's an important cultural moment and one that we're proud to authentically participate in as the largest athletic brand, singularly focused on empowering women and girls. Athleta has developed the Power of She with legendary athletes including Simone Biles and Katie Ledecky serving as game-changing brand ambassadors united in their mission to empower women and girls. The positive signs we're seeing at Athleta are encouraging, and we believe the team is on the right track."
Of note, the turn at Athleta is especially encouraging as the category is slowing. Category-leader Lululemon reported flat comparable-store sales increase for its fiscal Q1 2024, far below its typical high-single-digit rate, which reflect both slower category growth and some product missteps.
