Gap released their increased quarterly profits and it shows they've done better than investors expected.
👉 Background: Gap is the American clothing retailer that launched back in 1969. It's also the owner of Banana Republic, Old Navy and Athleta. It also previously had a collab with Ye's Yeezy brand.
👉 What happened: Now, Gap’s just released their quarterly profits which rose by 2.5% to $4 billion. They’ve done better than investors expected - in particular, its affordable luxury brand Banana Republic, which saw an 8% rise in sales.
👉 What else: Formal clothing is officially back on the menu.
But Gap has warned that inflation will make the next twelve months tough on its low to middle income earning customers.
💡An affluent customer base means a business can somewhat protect itself against a downturn. The companies that are still outperforming in the market are largely luxury brands (think: Hermes, LVMH and Ferrari)
💡In fact, ANU recently found that the poorest 20% of households face the highest cost-of-living pressures over the long term.
💡For GAP, their Banana Republic brand, which has more affluent customers, jumped 8% in sales whereas Old Navy and Gap, the more affordable brands, saw sales pretty flat.
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