The Gap, Inc. Goldman Sachs Global Consumer and Retail Conference

On the Gap brand. I think you have all watched our story. You are all familiar with our brand. I think 3 years ago, if we said Gap brand was going to be one of the fastest-growing brands and trending brands on TikTok, I don't think anybody would have believed us. But here we are, and I think it's a testament to the execution of our playbook. Our team, in particular, has been relentless and focused. Not only from a product perspective, which you've seen get enhanced, but as well in executing against that playbook with culturally relevant narratives. I think when you look at our product, the culturally relevant storytelling that we've been doing, and the drumbeat of that experiential moment that ultimately drives traffic, and drives interest, and drives conversation. Which is incredibly important today when you look at consumers and how fast they migrate through storytelling.

We need to be at the speed of culture, and I think Gap has delivered that. This is our 11th consecutive quarter of growth. It's our second double-digit quarter, which we're incredibly proud of. We have some really great statistics as well from the products that we've been delivering and the categories that we've been focused on. A couple of years ago, even before we spoke to you, we were the number 10th denim brand in the country, which we thought that was pretty good as top 10. Today, we're now number 6. So that's a big climb when you're talking about those rankings. Other really strong facts as well, kids and baby. We were sixth last year. We're now the fourth largest kids and baby business. Our customer file is also growing. And in that file, we also see the who of that.

So we're attracting Generation Z, which is very exciting as well. So we have a new generation that's entering into Gap while we're preserving the existing appeal. And that's a careful balance. Love the one you're with and try and attract new customers. And I think the Gap case study is one that we could all take a look at as we do with our portfolio and recognize that methodology is working really well. Really good other statistics. Traffic is increasing, AUR is increasing, the units are increasing. All of those metrics that really indicate health for the brand are happening. We've got more full price selling, which is incredibly important. Again, if you remember going into a Gap several years ago, it was more about price than it was about product. Now really the product is telling the stories that we want to tell.

So we have healthier margins, which is really obviously helping the overall P&L. And hopefully, you see what we see. Gap is in the zeitgeist. It is part of the cultural conversation. And through that, we're attracting incredible partnerships. You see a lot of collaborations coming from Gap. There's something happening every couple of weeks. By the way, that's with great intent. But we've got super influencers and great tastemakers and all of the attractive ways that we're driving cultural relevance that drives revenue. We just launched GapBag, and we're very excited about that, which just has a great display at Rockefeller Center. I think it just came down as Fashion Week ends. We launched Gap Fragrances, which you've got a sampler piece there, which we're excited about.

Ultimately, I think when you look at how the playbook has been executed by Gap and our Gap team, it just shows the power that we have in our portfolio. It shows that we can do this. We're growing our share in those destination categories that we believe are important. We're growing our customer base, which lends well to the future proposition of the brand. We're expanding our distribution. We're expanding categories and ultimately on pace to execute that long-term growth model that we believe the brand has as potential going forward.

Well, first off, it is important to take a step back and recognize that this was the first comp decline in 11 quarters. So we have actually been making progress on Old Navy, and we feel good about Old Navy in general. It is very clear, and we've been very transparent. We missed the seasonal categories. I think I wake up in the middle of the night saying that phrase, by the way, because it's just constantly something that we don't feel good about. But the good news about it is that we've diagnosed it. It is, to some extent, a bit transitory. The transitory drivers really is what we fell short of in the first half. Dresses just didn't appeal to our consumer for the most part. We had a very big assortment of everyday dresses, and the consumer really wanted occasion dresses.

It wasn't that we didn't have the right dresses, we just had too many of those dresses. In the context of the other categories, it was inventory mix issues. The product actually worked. We just didn't have enough of it to work. The good news in that context is it was very clear. It was diagnosed. We've improved product and assortment mix as we move forward. The more that we move forward, by the way, by the day, seasonal categories get less and less important for us as we look at the back half. We've already seen the customer respond to our product offerings. Our marketing has been totally rewired. In the context of that, to create more sharper price points and more value orientation with, of course, the Old Navy narrative that keeps our brands really relevant.

Our denim category, active category, kids and baby, these are the areas of strength for our brand and the areas that you're going to see more and more marketing as the weeks go by, and ultimately become the important categories that drive the back half. I've been incredibly energized, by the way, on the Cardi B campaign. Don't worry, we have a little clip of it, so if you haven't seen it, which would surprise me if you haven't seen it, but if you haven't seen it, we have it. But it is an example of the rewire that we did last quarter, learning from what our marketing drove in the last quarter, which by the way, was with Paris Hilton, drove incredible engagement but didn't drive the traffic. So measuring what worked and what didn't work.

What didn't work in that campaign was we weren't as product specific as we needed to be and as price specific as we needed to be. We rewired the Cardi B campaign to do just that, and it's resonating. It's obviously got a greater focus on product and value. It still holds the tongue-in-cheek playful narrative that is Old Navy. But without me talking about it, why don't we just take a quick look at it?