Bethany Biron/Business Insider
- Gap Inc. reported that same-store sales of its namesake brand decreased by 10% in the first quarter of 2019 as a result of inventory woes and declining foot traffic.
- After Gap announced plans earlier this year to spin off its Old Navy brand into a separate company, the off-price brand posted its first decline in three years.
- We visited a Gap store to see what’s going wrong.
Three months after Gap Inc. announced it would split into two publicly traded companies — Old Navy as a standalone entity and a still-unnamed company that would include Gap, Banana Republic, Athleta, Intermix, Hill City, and Janie and Jack — the retailer continues to face an uncertain future.
On Thursday, Gap reported that same-store sales of its namesake brand decreased by 10% in the first quarter of 2019. Meanwhile, comparable sales slumped by 4% across all brands in the portfolio during the same period, including at Old Navy, which posted its first decline in three years.
Read more: Old Navy splits off from Gap
In a call with investors, Gap CEO Art Peck cited a variety of external factors — including unseasonably cold weather, late holiday schedules, and lower tax refunds —before acknowledging significant issues related to inventory and foot traffic.
In the last quarter, Gap was particularly focused on improving these weak spots and reducing expenses, Peck said. This effort includes shuttering more than 230 stores over the next two years and shifting marketing efforts away from its namesake retailer, with plans to roll out new advertising in coming quarters.
While Gap executives remained tight- glipped regarding updates on the Old Navy separation plan, Peck said that the team is "pushing, in many respects, harder than the comfort level is of the organization to move forward." The break-off is slated to be complete in 2020.
We visited a Gap store in New York City and saw why the brand continues to face an uphill battle:
We visited a Gap store in Manhattan’s Financial District. The three-story location sells an assortment of womenswear, menswear, children’s clothing, intimates, and athletic apparel.
Bethany Biron/Business Insider
Source: Business Insider
There was an extra 50% off sign in the entryway. The sales associates were quick to alert the handful of shoppers to the sale as they browsed at 11 a.m.
Bethany Biron/Business Insider
The women’s styles seemed fairly stale and uninventive. Part of Gap’s enduring appeal since its founding in 1969 has been its classic denim and simple silhouettes.
Bethany Biron/Business Insider
However, the the lack of variety, especially compared to Old Navy, has grown staid.
"From a product perspective, the team identified that our product offering was too narrow and lacks diversity in silhouette, print. pattern, and color," Peck said on the earnings call.
See the rest of the story at Business Insider
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SEE ALSO: More than 7,000 stores are closing in 2019 as the retail apocalypse drags on — here’s the full list
Source: Business Insider – feedback@businessinsider.com (Bethany Biron)