May 25, 2022

Walmart to Sell New Line of Gap-Branded Homegoods

Walmart Inc.

WMT -0.12%

and

Gap Inc.

GPS 4.16%

plan to partner on a line of Gap-branded homegoods that will be sold in Walmart stores, according to people familiar with the situation, a sign of how each retailer is stretching into new territory to stay competitive.

The line of home items will be called Gap Home and go on sale later this year, say some of these people.

In recent years, Walmart has worked to expand its apparel and homegoods selection to include brands perceived as higher end, part of its efforts to appeal to a wider customer base and boost online sales. The retail behemoth earlier this year named fashion designer Brandon Maxwell as creative director of Free Assembly and Scoop, private-label brands that Walmart says are part of its “elevated fashion brands.” This month, Walmart said it would acquire ZeekIt, which allows digital shoppers to see how clothes might look on their bodies or models with similar bodies.

Gap, which has been working to revive its namesake brand, doesn’t currently sell homegoods and has never sold its branded items inside Walmart.

Gap signed a deal last year with licensing company IMG that will allow it to expand into home décor, furniture, textiles and other categories. The agreement also includes Gap’s Banana Republic brand.

Gap had reported a string of weak sales in recent years and struggled throughout the pandemic as spending gravitated away from apparel. But it has made improvements under new Chief Executive

Sonia Syngal

and reported positive same-store sales in North America in the fourth quarter for the Gap brand. The company reports quarterly earnings on Thursday.

In the past Walmart has struggled to create premium apparel brands, reverting back to a focus on basics like socks and sweatshirts. Apparel merchants at Walmart have used a pyramid model to guide their work, with basic clothing making up the base of the pyramid, the bulk of what they aim to sell. But as digital sales become a higher priority at the retailer, executives are experimenting with new models, such as selling higher-end brands only online.

Specialty retailers like Gap once shied away from selling their goods anywhere but their own stores or websites. But with competition intensifying, such brands are increasingly broadening their distribution, sometimes even selling through competitors like Amazon.com Inc.

Write to Sarah Nassauer at [email protected] and Suzanne Kapner at [email protected]

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