For a glimpse into how America has been dressing this summer, look no further than Gap Inc. Its only brand to post a sales increase in the second quarter was Athleta, its athleisure chain, while its worst drop was at the office garb-focused Banana Republic, which saw its business halved.
Still, Gap, which also owns Old Navy and its namesake chain, appeared to be getting its business back on track on Thursday, as it reported an 18 percent sales decline to $3.3 billion for the three months ended Aug. 1 and a net loss of $62 million. While those would be grim figures in pre-pandemic times, the clothing giant had previously reported a net sales plunge of 43 percent to $2.1 billion in the three months ended May 2 and a quarterly loss of nearly $1 billion as it struggled with temporary store closures.
Gap said on its earnings call that it sold $130 million in face masks during the quarter and secured the No. 1 Google search result for “face mask style guide.”
Gap, with its roughly 2,700 stores in North America, is often seen as a barometer of apparel spending among Americans, with its family-friendly, casual styles at Old Navy and Gap, professional clothing at Banana Republic and pricey activewear at Athleta. The retailer said that quarterly sales fell by 5 percent at Old Navy and 28 percent at Gap.
The company nearly doubled its e-commerce business in the quarter, while store sales fell by almost 50 percent. The shift — e-commerce accounted for half of its North America sales — demonstrated “our ability to pivot to a digitally-led culture,” Sonia Syngal, Gap’s chief executive, said in the statement. The San Francisco-based retailer, which has been embroiled in legal disputes with its landlords around unpaid rent during the pandemic, said that about 90 percent of its global stores were open as of Aug. 1.
While apparel chains and department stores have been battered by the outbreak, national chains like Best Buy and Dick’s Sporting Goods have seen sales jump this summer as many Americans shifted their spending to items to use at home or while socially distancing outdoors.
The Federal Reserve, in a significant shift that could keep interest rates low for longer periods, said it would focus on keeping unemployment low and allow inflation to run slightly higher in good times.
The Fed chair, Jerome H. Powell, announced the change in a speech on Thursday at the Kansas City Fed’s annual Jackson Hole symposium that was accompanied by an updated long-run statement describing the Fed’s policy strategy. He said the shifts would allow the gains of a strong economy to benefit a wide range of workers.
“Our revised statement emphasizes that maximum employment is a broad-based and inclusive goal,” Mr. Powell said in remarks prepared for delivery Thursday, and “this change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities.”
The Fed had been raising rates as joblessness fell to avoid economic overheating ending in breakaway inflation, but in recent years, price gains have been tepid. The changes are an explicit recognition that too low, rather than too high, inflation is the problem.
By emphasizing the importance of a strong labor market and underlining the Fed’s modesty in understanding how long, and how far, unemployment can fall, Mr. Powell and his colleagues used their updated framework to lay the groundwork for longer periods of low interest rates, which could translate into both long periods of cheap mortgages and business loans and stronger future job markets.
Mr. Powell, in explaining the changes, said that “with interest rates generally running closer to their effective lower bound even in good times, the Fed has less scope to support the economy during an economic downturn by simply cutting the federal funds rate.”
The result, he said, “can be worse economic outcomes in terms of both employment and price stability, with the costs of such outcomes likely falling hardest on those least able to bear them.”
Mr. Powell acknowledged that it might seem “counterintuitive that the Fed would want to push up inflation,” which raises prices. But he said the trade-off was a less robust economy that did not deliver gains evenly.
“We are certainly mindful that higher…