Gap shifts focus to Old Navy, cuts Banana Republic stores
Gap Inc. plans to shift its focus to its growing Old Navy and Athleta stores, and away from the Gap and Banana Republic brands.
The company said Wednesday it will close about 200 Gap and Banana Republic stores in the next three years and open about 270 Old Navy and Athleta locations during the same period.
Lower-priced Old Navy has been a bright spot for the clothing retailer, posting rising sales even as they fell at the Gap and Banana Republic.
The San Francisco-based company says Old Navy is on track to surpass $10 billion in sales in the next few years. And Athleta, which sells athletic clothing, is expected to exceed $1 billion in sales. The company expects to reap about $500 million in savings over the next three years by better taking advantage of its scale.
“We continue to move with the customer and meet them where they are,” Gap CEO Art Peck told analysts Wednesday at a Goldman Sachs Global Annual Retailing conference that was broadcast over the internet.
Gap’s moves are the latest to reinvent the chain and are being spearheaded by Peck, who took the helm in 2015. The company faces the same problems as other fashion retailers, as shoppers buy less clothing in general and shop more at off-price chains or buy online when they do. That has resulted in sluggish traffic at the stores. But Gap Inc. also has long struggled with its own problems, mired in a sales slump as its clothes don’t stand out in an overcrowded landscape.
The company has been offering frequent discounts to get shoppers to buy, but recently it has been trying to pull back on price-cutting. It also has been working hard to improve fit — a problem that has long bedeviled the retailer— and has been trying to rework its fashions.
The company has been cutting its store numbers over the last decade. Since 2005, the chain has closed 650 stores and reduced its square footage by 5 million square feet, Peck said. trict, staffing services noted some unexpected drops in demand from Houston’s oil and gas firms, according to the report. Strong auto sales helped boost retail sales district-wide, despite softer vehicle demand in Houston and Central Texas.
The energy industry remained on stronger footing than two years ago, but it was far from ascendant. Oilfield services demand held steady and drilling in the Permian Basin expanded, but drilling activity throughout the district tapered off.
Firms expected rig counts to hold steady or fall the rest of the year and expected lower prices for the first half of 2018. Several of the Dallas Fed’s contacts in the sector said they were scaling back plans for capital spending.
Prior to the hurricane, refinery utilization rates were increasing along the Gulf Coast, the report said. Harvey knocked off almost two-thirds of Texas refining capacity in the days following landfall, although many of those facilities have restarted or will soon do so.
The hurricane also shut down one of the country’s largest ports and brought a key rail and freight transport hub to a standstill. Those operations also were resuming this week, and they had entered the storm period in healthy condition, according to the report.
Contacts in most industries reported optimistic outlooks on business and the economy. Political uncertainties — including the possibility that NAFTA renegotiation could limit export markets for farmers — tempered the overall enthusiasm.
Before Harvey, overall employment gains and a tight labor market appeared to be pushing up wages. Despite slower hiring at retailers and energy firms in particular, reports of labor shortages “were widespread across sectors, particularly for skilled workers,” the report said.
Factory production accelerated during the six-week period, partly due to stronger output of computer and electronic products and other durable goods.
Demand for nonfinancial services rose, particularly for professional and technical services. Commercial and industrial lending helped boost overall loan demand despite sluggish consumer lending, the report said.
Home sales held mostly steady, with moderately priced homes in much higher demand than high-end price points. Apartment leasing remained active in Austin, the report said, but rent growth had moderated and “intensive” competition among new properties had led to incentives in some high-end submarkets.