Richard Dickson
President and Chief Executive Officer at GAP
Good afternoon, and thank you for joining us. During today's call, I'll provide an update on our first quarter performance and progress in the context of our strategic priorities. Then Katrina will walk you through our detailed financial results and share our outlook before we open up the call for questions. Gap Inc. delivered a strong quarter that exceeded expectations across key metrics. Importantly, we gained market share for the fifth consecutive quarter with share gains and positive comparable sales at all brands, demonstrating improved relevance with our customers as we execute against our brand reinvigoration playbook.
We are on a journey to become a high-performing house of iconic American brands that shape culture, but this will take time, perseverance, and rigor. That said I am encouraged by the momentum and results. We remain focused on our four strategic priorities, which are, first, maintaining and delivering financial and operational rigor; second, the reinvigoration of our brands; third, strengthening our platform; and fourth, energizing our culture.
Let's start with financial and operational rigor. The improvement in our first quarter performance reflects our continued focus on this important priority. Comp sales for the company were up 3% with positive comps for all brands. Old Navy posted comps up 3%, the highest quarterly comp in three years with continued strength in the women's business. Gap's comps were also up 3%, gaining share in men's, women's, and kids and baby, with women's performing well again, driven in part by success in our Linen Moves campaign. Banana Republic comps were up 1% as the brand continues to focus on strengthening fundamentals.
And Athleta's comps were up 5% in the quarter, reflecting better execution against the brand's strategy and encouraging signs of customer response to new product innovation. We expanded gross margin in the quarter and remained focused on managing expenses, resulting in significant operating margin expansion. We also maintained rigorous inventory discipline with first-quarter levels down 15% year-over-year. We ended the quarter with $1.7 billion of cash, cash equivalents, and short-term investments on the balance sheet.
Our financial footing remains strong and positions our company well for the future. Operational and financial rigor is becoming the fabric of how we work, which we will continue to reinforce through better processes and cultural accountability and expense efficiencies will continue to be an area of focus.
Turning to our next strategic priority, we're focused on driving relevance and revenue by executing on our brand reinvigoration playbook. Each brand is at a different point in the process, but I'm encouraged by the improvements we're driving across the portfolio. We are building stronger brand identities and purpose, recently highlighted by Gap brand championing originality with our Linen Moves campaign. In terms of trend-right products, Old Navy is seeing product improvement across the Board.
Gap brand is seeing success in standing behind big ideas. Banana Republic is making headway with its classics line and Athleta product innovation is gaining traction. Our products are being amplified through more compelling storytelling across each brand, cutting through with clarity and better differentiation. Cultural relevance in marketing are starting to show up in metrics that matter like buzz, consideration, and brand relevance. We are working to provide our customers with a more engaging omni-channel experience with improved digital execution, new layout and visual merchandising tests in our stores, and a clearer and compelling pricing strategy.
And we aim to execute with excellence, in store and online across these pillars. Each of these are early proof points of the playbook in action. Over time, we expect to see this unfold more consistently and more holistically. Now I'd like to update you on the progress of each of our brands. At Old Navy, we are reasserting the brand and being more deliberate and consistent about how we express the brand, clearly communicating fashion and value for the family. Old Navy's brand acceptance scores for quality, impression, and reputation are strong, giving us confidence that Old Navy is reasserting its position as these style authority in the value space.
In the first quarter, we continue to focus on driving strength in the Old Navy women's business, while also highlighting looks for the family through campaigns featuring spring colors and fabrications like linen. A key category for the brand is active, where Old Navy is the fifth-largest brand in the space. We are driving outperformance with intent in this category with share gains for the third consecutive quarter. We have also made a concerted effort to build greater trust with our consumers through precision and clarity around the combination of storytelling and pricing with WOW prices in-store and online.
We continue to test opportunities to enhance customer experience in the store through physical layout and new merchandising strategies. These actions are driving better consistency and experience and the consumer is noticing, enabling us to win market share in key categories like active and dresses in the quarter. At Gap, we are reigniting the brand, working to deliver confident trend-right products priced right and expressed through big ideas and culturally relevant messaging.
Linen Moves is a great example of taking trend-right product and amplifying it, turning it into a big idea expressed through compelling in-store merchandising and strong digital execution. During the quarter, we saw outsized results within this category with Gap linen sales up double-digits versus last year. Building on this success and the continuation of the campaign, new deliveries will include new colors and new styles as we aim to secure a leadership position in this important seasonal fabrication.
While this campaign itself is encouraging, our focus going forward is on relentless repetition of these type of creative expressions. Collaborations also remain an important part of our brand strategy. The recent launch of our limited edition 51-piece collection with California clothing label Doen is generating buzz, driving both relevance and revenue for the brand. These examples demonstrate the progress unfolding through better storytelling, improved assortments, and our stronger brand identity.
Our stores are presenting a clearer brand narrative and we're showing up for the customer with healthier in-stock levels. These actions are building a stronger foundation that we believe will drive more consistent performance over time. Turning to Banana Republic. We are focusing on reestablishing this brand to thrive in the premium lifestyle space. The work to fix the fundamentals is underway, and we are starting to see green shoots in the first quarter with positive comp growth, a notable improvement versus the fourth quarter.
Banana Republic Classics and Finest Fabrics performed well, benefiting from foundational improvements, including increased product depth in stores, elevated marketing, and better site execution. With the close of the first quarter, we decided to commence a leadership transition at the brand. We see a significant opportunity for Banana Republic and are working to set the stage for improved future performance under new leadership. We are resetting Athleta, a brand with significant growth potential and a clear and distinct brand positioning rooted in the power of She. Core bottoms performed well in the quarter, giving us confidence as we accelerate this loyalty gateway category.
Brand heat and excitement were evident in the response to our limited edition drops. Our innovative fabric, PowerMove, successfully launched with Train and Run products contributing to the significant improvement in results in the first quarter. This year has been a major step forward for women's sports as female athletes globally are beginning to get the attention and credit they've long deserved. It's an important cultural moment and one that we're proud to authentically participate in as the largest athletic brand singularly focused on empowering women and girls.
Athleta has developed the Power of She Collective comprised of legendary athletes including Simone Biles and Katie Ledecky serving as game-changing brand ambassadors, united in their mission to empower women and girls. The positive signs we are seeing at Athleta are encouraging and we believe the team is on the right track.
Moving to the third strategic priority, strengthening our operating platform. I talked to you last quarter about opportunities to drive scale and efficiency across our organization and to better support our brands through our platform functions like supply chain, technology, and media. After conducting an internal assessment that I mentioned last quarter, we identified an opportunity to implement a new operating model for media activation, that will enable us to up-level our marketing capabilities and offer our brand teams better leverage.
As part of this effort, during the first quarter, we selected a new premier media agency partner who will help us to leverage our media dollars to be more effective in creating demand and building brand equity. This new model and approach will centralize and optimize our media mix across the marketing funnel and align measurement and metrics across brands. It will also elevate our ability to use content as a strategic differentiator for cultural amplification, supporting a key element of our brand reinvigoration playbook. This is a great example of strengthening our platform and leveraging the scale of Gap Inc. to bring greater value and capabilities to our individual brands. We look forward to sharing more as we initiate this important partnership.
And the fourth strategic priority is culture. Over the last nine months, I have hosted numerous town halls where thousands of employees from around the world tune in, both in person and virtually. The excitement is building across our organization. We are seeing more collaboration between our teams and accountability is becoming the cultural norm. Chief People Officer, Amy Thompson has been working alongside our teams to put our company values into action, evolving us into a more customer-centric organization that approaches business through a lens of curiosity and collaboration and focused on achieving excellence.
2024 is off to a good start. As we continue to execute our four strategic priorities, we are dialing up the exciting and thoughtful work to reinvigorate our brands. Against a backdrop of macroeconomic and geopolitical uncertainty, we performed well and delivering encouraging results in the first quarter, giving us the confidence to raise our guidance for the year.
Before Katrina walks you through the detailed results, I'd like to take a moment to thank our global team across our stores, distribution centers, and headquarters. And all of our partners for their hard work and dedication as we continue to execute and unlock the power of Gap Inc. We know we have a lot of work to do, but we are excited about the opportunities ahead.
And now, I'll turn the call to Katrina for a closer look at our financials.
