Total sales declined 1.4% in Q2 for Gap, but CEO Art Peck expects online sales to grow by double digits this year.

Apparel group Gap Inc. will roll out buy online, pick up in store service in the coming months.

Stores will be key to Gap’s future online sales success as apparel retailing continues to evolve, CEO Art Peck said during the retailer’s second quarter earnings call.

“We’ve added capabilities such as reserve in store, find in store, ship from store, order [online] in store—some as much as five years ago—and we’ll be testing a new buy online, pick up in store program this next quarter,” Peck said, according to a transcript from Seeking Alpha. “We aren’t behind. We’re ahead, and we are accelerating.”

Total sales are not accelerating, however; they declined 1.4% for the fiscal second quarter ended July 29. E-commerce at Gap, No. 24 in the Internet Retailer 2017 Top 500, is profitable and the retailer expects to grow its online sales by double digits in the coming months, Peck told analysts on the earnings call this week. He did not give details on web sales and Gap does not break out online sales in its quarterly earnings statements.

Peck did not say how many stores will test buy online, pick up in store, or which of its apparel brands will be first to try it. Besides the Gap brand, the retailer operates Banana Republic, Old Navy, Athleta and Intermix. Gap did not immediately return a request for comment.


Helping fuel Gap’s online sales growth, Peck says, is new online customers.

“We’re seeing traffic grow. We’re seeing our email acquisitions grow. We’re seeing our SMS list grow,” he said.

Multiple analysts asked about the possibility of Gap selling on Inc. (No. 1), but Peck wouldn’t comment. He had hinted on in May 2016 during the retailer’s Q1 earnings call that Gap was at the very least considering the possibility of selling on Amazon. On Thursday, he sang a slightly different tune.

“As to something on Amazon, I just really don’t want to comment right now. I’ve commented where we have had effective third-party relationships like Tmall, which has been a wonderful relationship for us in China,” Peck responded when asked a second time about a potential partnership with Amazon “We’ve done business with Zalando. At the moment, we’re staying the course, and we’re focused on delivering an exceptional brand experience, whether it’s digital, in our stores or the combination of the two.” Online-only Zalando SE is based in Germany and is No. 7 in the Internet Retailer 2017 Europe 500.

Beginning in the early 2000s, Gap did sell some apparel on Amazon, but the retailer was less than enthusiastic about that relationship because Amazon was not a destination for apparel, according to a Gap executive. “Right now the Amazon relationship does not have a primary revenue impact. But it’s not something we are looking to abandon at this point,” said Cornell Williams, then-vice president-direct and chief technology officer said in August 2003. By late 2010 or early 2011, Gap had stopped selling on Amazon.


For the second quarter ended July 29, Gap reported:

  • Net sales of $3.799 billion, down 1.4% from $3.851 billion during the same time last year.
  • A year-over-year companywide comparable sales gain, including e-commerce, of 1%, compared to a 2% decline.
  • Net income of $271 million, up from $125 million.

For the first six months of fiscal 2017, Gap reported:

  • Net sales of $7.239 billion, down 0.7% from $7.289 billion during the same time last year.
  • Net income of $414 million, up from $252 million.