New ‘marketing muscles’ helped drive Gap sales: Strategist

Shares of Gap (GPS) are surging after the company revealed first quarter comparable sales grew year over year for all four of its brands. Gap CEO and President Richard Dickson spoke with Yahoo Finance Executive Editor Brian Sozzi about the company’s strategy and outlook. Dickson claims the company still has more work to do, adding, “it’s not a sprint, it’s a marathon.”

Telsey Advisory Group CEO Dana Telsey joins Catalysts to give insight into Gap’s performance and the drivers that brought customers into the company’s doors.

“Where the product is new, where there is innovation behind it, where there’s compelling marketing, it’s resonating. And yes, it was a Gap brand, but take a look at Birkenstock (BIRK), take a look at Abercrombie & Fitch (ANF), take a look at Ralph Lauren (RL) and Deckers (DECK). All were able to drive sales increases because of new marketing muscles put behind the product, and the value pricing that some of these products have with it. Because consumers today still remain what I call squishy, they’re being very cautious in where they decide to spend their dollars.”

Read more about Gap here.

Watch Brian Sozzi’s interview with Gap CEO and President Richard Dickson here.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video Transcript

Shares are surging after blowing past the street’s expectations in its first quarter print, we got the retailer posting sales growth in all four of its brands.

Now G Ceo Richard Dixon joined Yahoo Finances, executive editor Brian.

So to discuss these results shortly after they were released, here’s what he had to say.

It’s not a silver bullet rigor is showing up in every part of our branded uh portfolio.

And the productivity that we’re driving is obviously the metrics that we’re enjoying right now.

But we’ve got a lot of work to do.

You know, we’re, we’re very pleased we’re taking a very quick victory lap but it’s not a sprint.

It’s a marathon for on what the signal is about the state of retail.

We want to bring in Dana Telsey Tea Advisory Group, CEO and Chief research Officer Dana.

It’s great to see you.

So let’s start with gap and then we can talk about where, what, what we’re seeing elsewhere, uh industry, why?

But when it comes to gap’s results last night, what do you think of what Dixon just had to say just in terms of they’re not out of the woods just yet they have more work to do, but it does seem like their product is resonating a bit better here with the consumer.

I agree with what he had to say.

Story continues

It, it is a marathon, it’s not a sprint.

I think there has been improvement.

The gap brand and certainly the marketing behind it with Gaps Linen moves has drawn appeal.

Now you have a collaboration with Doen.

I think the Banana Republic brand is still a ways away from showing consistent improvement given there’s still search for a new leader there.

It was good to see that the core bottoms improved at Athleta, but it did take promotions in order to move that and always under the hood at Gap with expenses and mar margin management, they’ve done a good job.

Consistency of sales and acceleration is what the Wall Street’s going to be looking at into the future for Gap.

I’m curious what you think was the single biggest driver in getting shoppers in the door at gap.

We are seen some reporting that the celebrity endorsements were part of what drove some of the traffic into stores to what extent do you think that that is a gap specific story or is that something that is a successful move across multiple retailers?

This cycle, one of the interesting things that we’re seeing coming out of first quarter earnings so far is where the product is new, where there is innovation behind it, where this compelling marketing, it’s resonating and yes, it was a gap brand.

But take a look at Birkenstock, take a look at Abercrombie and Fitch.

Take a look at Ralph Lauren and Deckers.

All were able to drive sales increases because of new marketing muscles put behind the product and the value pricing that some of the these products have with it because consumers today still remain what I call squishy.

They’re being very cautious in where they decide to spend their dollars.

So then Dana, what does that tell us about the winners and losers to come here within the retail sector?

Will we see a further divide just in terms of the retailers that are working, that are resonating, that are doing the right thing here in terms of winning that consumer spending dollar versus those who continue to lag behind.

Yes, you you will.

I mean, overall the products gotta be worthy that the consumer deems valuable in order to add and take dollars out of their wallet.

So it’s gonna be very interesting given some of the next names that are coming up.

I mean, next week you have Lululemon, you have PV H. We know there’s been a lot of brand heat around what PV H is doing with the Calvin Klein and Tommy Hilfiger brand.

We’re gonna hear from Lulu what they are seeing in their business given every, all our checks in the stores that I’ve done lately.

We are seeing color, you are seeing more smaller sizes and one of the things we’ve heard is active continues to do well.

And so, Lulu obviously at the forefront of active after calling out that the consumer was more sluggish going into the first quarter.

It’s gonna be interesting to see the rates of growth that are, that are reported next week.