Gap tries to improve 'dull' clothes
Revamping women's clothing is the top priority for the retailer, which has watched North American sales slide.
Gap (GPS) is in a crisis, having tried unsuccessfully for years to turn business around. The company has booted its top designer and its president, and is desperate to get back on track by the holidays. Gap cut its full-year profit forecast this afternoon, and the stock has dropped nearly 13% in after-hours trading.
"I have a much higher sense of urgency," chief executive Glenn Murphy said in a rare interview. "This brand is just too damn important to not see that kind of effort being put forward," he told The Wall Street Journal.
The biggest priority for Gap is women's shirts. Gap can't get them right, and sales have been a mess for years, writes Elizabeth Homes. Sales at the Gap's 1,000 U.S. stores have fallen 32% since 2004. Now, Gap's North American stores contribute just a quarter of overall revenue, which isn't helping fund overseas expansion enough.
Post continues after this video about Gap's issues:
The problem? Gap is just too middle-of-the-road. In the economic turmoil of the last few years, U.S. shoppers have gone down two paths when it comes to clothing. One group is downsizing to cheaper basics at Target (TGT) and other stores, including the Old Navy brand also owned by Gap. The other group still buys the pricier items at stores like Banana Republic (also owned by Gap).
The Gap brand has become the forgotten middle child.
Another problem is that Gap clothes have lost that wow factor. Murphy himself describes the women's clothes as "dull." He also tells the Journal he doesn't like the "dusty, makeup colors" such as the pale pinks and beiges currently in Gap stores.
So the question is whether Gap can revive women's clothing in time for the holidays. Murphy says that the denim selection is doing fine, as are the kids and men's collections.
Gap cut its full-year profit outlook this afternoon, citing big cost increases as the price of cotton and production continues to rise. The company says its product costs will likely rise 20% later this year -- far more than any price increase it can put on its clothes.
Investors booed the news, sending Gap shares down nearly 13% in after-hours trading to $20.30.
Profit fell nearly 23% in the first quarter, which ended April 30, the company said today. That's about 40 cents a share, down from 45 cents a share a year ago. Still, that's better than the 39 cents a share analysts were looking for.
Sales were not a pretty picture. Net sales fell 1% to $3.3 billion. If you look at sales only at stores open at least a year, it was even worse, with sales down 3%. All three of Gap's chain brands saw sales slide in North America. International sales weren't a bright spot either, with same-store sales down 6%.
Murphy said he was "disappointed" in the quarter, Reuters reported. Now, Gap says its full-year profit will only be between $1.40 and $1.50 a share. That's down from an earlier estimate of $1.88 to $1.93 a share.
Gap lacks the quality it was once known for. They continually update their denim styles and sizes - last time I purchased their jeans was two years ago, my favorite styles were marked way down, and now I know why - they've been restyled and resized! Long and Leans used to be my go to jeans (sorry, I'm on the slimmer side of things) - now they're too big for me! That being said, the skinny jeans are TOO skinny, so are the straight legs. Hard to shop at a store that was a favorite, where everything fit, and now doesn't because the sizing is all over the place. Years ago I'm size 2( I have a favorite Gap skirt I've had for 15+ years, size 2, still fits) now XXS/00??? HARDLY!!! Small, petite, yes - incredible shrinking woman, no!!! Tired of retailers and their 'vanity' sizing when my body/size hasn't changed.
Cutting cost by reducing thread count and cheap foreign labor shows what they care about and it's why all 3 (gap,navy,banana) stores are off my list.
As a man, I can get the "blah" look for cheap. So why bother with them.
Last purchase- off white linen pants with a dense thread count about 3 years ago. Can't find them. the new ones are cheap and thin.
I have seen the quality of your clothes go down hill in the last 10 years. Next I'm glad you are getting new designers.. cause your clothes lately are ugly!!! Also over the years your fit has just gotten worse and worse,,,not only under the Gap label but also the Old Navy label. So.. go back to basics, khakis, slacks, jeans, t-shirts and blouses that appeal to the mid crowd not just teeny boppers. Let Old Navy be the cheap teenage store and let your Gap stores go back to the adult ladies who don't necessarily want super skinny jeans. I like low rise jeans that fit nice... but when they all look like a toothpick couldn't fit in them... So please go back to your basic slightly trendy adult clothes and let the designer over at Old Navy work the younger crowd. Also.. remember... we aren't willing to spend our dwindling dollars on poor fit, quality or style.. so lower the prices, fix the styles and fit and you will turn your stores around.
There is no place to shop for modestly priced, nicely tailored basics anymore Gap clothes attempt to be trendy but are poorly constructed and the material is not the same quaility it used to be. And i agree with other poster... too many skinny jean/too low rise options. Another problem i've encountered a lot lately is the lack of sizes. I assume stores are trying to reduce inventory to save money, but it has back fired. I hope someone at Gap reads these posts. I want my old Gap back! Bring back the well-made basics and i'll be back.
I don't have a problem paying for jeans if they are well constructed and make your butt look awesome like Sevens, Diesels and Hudsons. Gap's jeans aren't shaped well enough to be 70.00 a pair, and they stretch 2 sizes by the end of the day.
Also, the color scheme is pretty boring, and the clothes aren't really on trend. I hope the new designer that they hire can breathe new life into the brand.
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Do it once a year. This allows the best-performing asset classes to take off and run.
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