Yahoo Finance Kanye's latest hoodies can't seem to lift Gap's sinking stock
Gap (GPS) clearly thinks this fall will be the year of its classic hoodie being the coolest (or warmest) thing since sliced bread.
The retailer announced its latest product drop from its partner music icon Kanye West Wednesday — Perfect Hoodies. The 100% double-layer cotton hoodies in six different colors are reminiscent of the early-90s. Gap is hawking them for $90 a pop, kids sizes go for $70. In June, a year after signing a deal with West for a new clothing line, Gap released the first product under the Yeezy brand — a $200 puffer coat called the "round jacket."
Gap's hoodie push isn't a surprise.
"Our classic Gap hoodie is having a moment. So much so that we issued it in a vintage brown for pre-orders delivering this fall. And it is not just on TikTok. We've seen elevated search levels across Google. Seven times more people searched for the hoodie on gapinc.com in Q2 than a year ago," Gap CEO Sonia Syngal told analysts on an earnings call in August.
Shares of Gap, rose by as much as 5% Wednesday after the latest product release. But the bump was brief. The company's stock slipped more than 3% Thursday morning. Shares have lagged the broader market in the third quarter of this year, likely as a result of supply chain concerns gripping the retail industry. The stock is down 27% quarter-to-date.
Being proud to show off a Gap logo on one's chest hasn't been the norm in about a decade (maybe longer), so it's understandable Syngal would mention it during the company's most recent call.
"Data shows we are attracting a younger fan base with our teen logo hoodie, outpacing adult sizes by four times. I share this all for a reason," added Syngal. "This is a brand that is resonating, and this is a brand that people care about and want to wear proudly across their chest."
Luckily for Gap, it's seeing momentum with its cost-cutting efforts (see store closures) and Old Navy, as the interest in Gap hoodies may just be a near-term blip with consumers continuing to embrace coziness during the pandemic.
The retailer said second-quarter comparable sales at Old Navy increased 18% compared to the second quarter of 2019 (pre-pandemic). On this same basis, comparable sales at Gap rose 3% and Banana Republic fell 5%. Operating profit margins improved 190 basis points.
Gap is scheduled to report third quarter results on Nov. 24.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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