Back to top

Image: Bigstock

Gap Rakes in $135M on High Demand for Face Mask Amid Pandemic

Read MoreHide Full Article

The Gap, Inc.’s (GPS - Free Report) move to sell face masks in the wake of the new demand due to the ongoing coronavirus situation has proved to be a savior in disguise. The company’s decision to sell face masks came at a time when governments across the United States were implementing the mandatory use of face masks in a bid to curb the spread of this deadly virus.

Given this scenario, consumers’ buying habits have undergone a drastic change as they have been increasingly shifting to the online platform and sticking to essential items only. As a result, all of The Gap’s brands, including the namesake brand, Banana Republic, Old Navy and others took off to selling face masks of different patterns and colors in stores and online. This is likely to have worked in favor of The Gap as it recorded $135 million in sales from selling face masks to individuals and in wholesale as well.

Keeping in these lines, the company has recently begun a new business-to-business (“B2B”) product program to supply cloth face masks to companies and organizations as they open up. The masks are high-quality reusable, non-medical grade, which can provide protection to employees as they return to work. It has already sold nearly 10 million non-medical grade masks as part of the B2B program to employers in the City of New York and the State of California.

Similarly, many other apparel retailers turned to non-clothing essentials such as hand sanitizer, face masks and hand gloves. Some notable companies who entered the currently booming mask-making business include Nike (NKE - Free Report) , Adidas (ADDYY - Free Report) and Under Armour (UAA - Free Report) .

The Gap is reeling under the adverse impacts of COVID-19, recording a sales decline of 18.2% year over year in second-quarter fiscal 2020 due to soft store traffic stemming from temporary store closures during the coronavirus pandemic. Nonetheless, management noted that nearly 90% of its global store fleet is now operational. Notably, the company had been witnessing robust store traffic and productivity at reopened stores, particularly Old Navy and Athleta.

Even as the stores reopened, it continued to put up a great show in its e-commerce channel, with 95% growth in online sales during the fiscal second quarter. Further, its e-commerce business added more than 3.5 million new customers in the fiscal second quarter. This represented more than 165% growth in new online customer acquisition year over year.

Apart from these, the Zacks Rank #3 (Hold) company is making efforts to revive its store business. In this regard, the company signed a long-term agreement with Kayne West to bring the YEEZY fashion label to its stores and the website for customers across the world from 2021. Post the successful completion of this deal, The Gap envisions $1 billion in sales in the first five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

All said, we hope that the company’s well-chalked plans are likely to help it offset the coronavirus-related woes in the near term and get back its lost sheen. We note that shares of this company have gained 48.7% in the past three months, outperforming the industry’s growth of 14.4%.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Get Zacks' Exclusive Research on These Tickers

Normally $25 each - click below to receive one report FREE:

NIKE, Inc. (NKE) - free report >>

The Gap, Inc. (GPS) - free report >>

Adidas AG (ADDYY) - free report >>

Under Armour, Inc. (UAA) - free report >>