MW Here's how Gap's yoga-wear maker Athleta went from must-have to 'generic'
By Bill Peters
Athleta's expected recovery has been pushed out for three straight years, as an attempt to widen its appeal ended up 'appealing to no one in particular'
Gap acquired Athleta in 2008.
Price-conscious consumers and off-trend Old Navy dresses may have sunk Gap's stock on Friday, but some of the clothing retailer's most prolonged struggles have been in its smallest and most-overlooked brand: Athleta.
The women's yoga-wear maker, which Gap $(GAP)$ bought in 2008 to capitalize on the athleisure boom, has struggled to stand out since rivals started crowding the market. Eye-popping gains made in the aftermath of pandemic's home-workout craze have faded.
During Gap's first quarter - the results of which the company reported late Thursday - Athleta put up its sixth straight same-store sales decline. Some analysts on Friday said Gap has pushed out Athleta's recovery timeline for the third straight year, as it shakes up leadership and tries to rediscover its focus.
Gap, which along with Athleta and its namesake stores also owns Old Navy and Banana Republic, described 2026 as a "rebuild year" for Athleta. But management said the process of offloading older yoga and athleisure wear that people didn't want had taken longer than expected, putting pressure on sales.
The caution comes as consumers over the past four years have remained reluctant to spend money on clothing, and as higher gas prices due to the Iran war make for tighter budgets.
"While we recognize that it will take time for our actions to translate into an improved growth profile, Athleta remains an important brand in our portfolio, and we are focused on rebuilding it for long-term growth," Gap CEO Richard Dickson said on the company's earnings call Thursday.
From versatile to generic
For Athleta, it wasn't always this difficult.
The company was founded in 1998 with the intention of making workout wear that could help women and girls feel more confident. According to Athleta's website, it opened its first store in California in 2011 and became a certified B Corp in 2018 in an effort to commit to higher environmental standards. This decade, it has landed partnerships with the likes of Olympic gymnast Simone Biles and singer-songwriter Alicia Keys.
In 2021, Gap executives said that as the U.S. economy reopened after the pandemic, Athleta's customers "found versatility in styles that performed for travel, work and working out." In 2022, executives were still touting revenue growth of more than 60% compared with 2019 levels, even as same-store sales started to weaken. Then-CEO Sonia Syngal said Athleta had "multiyear tailwinds as athleisure and wellness are two big trends that aren't going anywhere."
But by 2023, Bob Martin, who was then Gap's interim CEO, said that Athleta could do better. He cited "product-acceptance issues over several quarters" and said some print and color selections weren't resonating with its core female customers.
Neil Saunders, a retail analyst at GlobalData, said that Athleta initially tried to target a wealthier, active but underserved baby-boomer generation. But he said the company, in an effort to chase growth, tried to appeal to everyone, lost focus and hasn't done enough to set itself apart.
"The temptation is always to say, 'Well, let's just widen it out at the edges, just be a bit more generic and then we can almost appeal to anyone,'" Saunders said. "The problem is that they actually ended up really appealing to no one in particular."
When Gap bought Athleta nearly two decades ago, the athleisure industry was still nascent. But over the years, Lululemon Athletica (LULU) - founded the same year as Athleta - as well as brands like Alo, Fabletics and Vuori also began chasing customers looking for workout and hangout apparel. Athleisure growth slowed overall.
Since the pandemic, wardrobe refreshes have skewed more formal. Vuori, Saunders noted, offers some denim and clothing that could work in offices or on casual dates. Athleta doesn't really have as much flexibility to do that, Saunders said, since doing so might run up against selections at Gap's other chains.
However, adventures beyond core workout wear have gotten Lululemon and Under Armour $(UA)$ in trouble. To change course, Lululemon has appointed Nike $(NKE)$ veteran Heidi O'Neill as its new CEO. But given Nike's own recent struggles, some analysts questioned the move.
New leadership, streamlined selections
Over the summer, Gap appointed another Nike veteran, Maggie Gauger, as Athleta's new CEO. During Thursday's call, Gap CEO Dickson said that under Gauger's leadership, Athleta had streamlined product selection. Newer items, like looser pants designed for travel and new leggings designs, were resonating with consumers, he noted.
Still, same-store sales at Athleta fell 11% during Gap's first quarter, the sixth straight quarter of sales declines. Revenue overall fell 12% to $270 million.
J.P. Morgan analysts, in a note on Friday, said that Gap's management initially indicated Athleta's rebound would see a "full inflection" in the spring of 2024. But in 2025, they said, expectations shifted to a longer recovery trajectory. Gap executives on Thursday said they believe Athleta's second quarter will be a lot like the first.
"Said differently, the Athleta recovery timeline has been pushed out for a third consecutive year," the J.P. Morgan analysts said.
Shares of Gap tumbled 15.4% on Friday and are down 24.3% over the past 12 months. The stock closed Friday at $21.15 - compared with prices above $50 in Gap's heyday in the late 1990s, and above $45 at its 2014 highs.
Lululemon and Vuori also face additional competition from cheaper dupes of items like leggings and tops. Athleta, meanwhile, has bigger problems, according to Saunders.
"Let's be blunt about it: Athleta doesn't really have a brand that people would want to dupe," he said.
-Bill Peters
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 31, 2026 10:00 ET (14:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments