Gap tries to improve 'dull' clothes

Revamping women's clothing is the top priority for the retailer, which has watched North American sales slide.

By Kim Peterson May 19, 2011 3:32PM

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.

36Comments
May 19, 2011 4:47PM
avatar
I worked at GAP for 4 years when I was going to college. From what we had in stores back then to what is in stores now is a complete turnaround. The ladies section is full of drab and neutral toned shirts, pants & skirts that in no way make you feel good about buying them. When I worked there we had clothing in every color of the rainbow - all year around. We had variety, which is what I believe they are currently lacking. They need someone with fresh and new ideas to come in and revamp the entire line. They need to realize that not everyone looks good in a pair of skinny jeans and make the clothes more universally fitting and flattering. GAP needs to combine style, quality and cost. They need to realize that the majority of their shoppers are women and that we want to buy things that make us not only look good, but feel good, too.
May 19, 2011 5:33PM
avatar
They're too expensive for what you get, even the Outlet stores are overpriced.
May 19, 2011 5:10PM
avatar
I'm tired of the high prices and low quality merchandise.  I will pay the price for quality.  I'm tired of the jeans not fitting and the tshirts looking almost see-through they're so thin and cheaply made.  They had better style in the late 90's and the quality and price were much better.
May 19, 2011 4:18PM
avatar
Perhaps if they hired competent staff the sales might increase.  I have walked into the Gap several times, the clerks can't even be bothered to greet me.  I won't go back.
May 19, 2011 5:37PM
avatar

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.

May 19, 2011 6:04PM
avatar
Gap is not the only store that suffers from overpricing/low quality/aloof personnel etc...I recently went to Sears and JC Penneys and found them to have those same things in common ( I refuse to buy clothes at Walmart or Target.....talk about low quality ... their quality really, really sucks !) and don't even get me started on Khol's prices...what a shocker...I think all those stores need to get a clue on what is really going on with their customers reality, in the real world..  shopping has become a thing you do 'as needed'  and not the favorite thing to do to pass the time...there is just not enough money to do that anymore..so the things we buy have to be attractive,durable and have a sensible price tag...yes there are still a few who can throw money around....but believe you me...they are in the minority...so get a clue retailers and welcome to my world !!
May 19, 2011 5:27PM
avatar
All the clothes are boring- I used to love Banana Republic, but the quality has dropped and the prices stayed high. At all three stores you can literally see through their shirts.
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.

May 19, 2011 4:33PM
avatar
I agree that the staff is not very customer service oriented and could care less. My biggest issue is that their clothing is way overpriced especially since I personally purchased tank tops that are not falling apart and not worth what I paid for them. Their jeans are the only jeans that I like but not at the $50 plus for a pair. 
May 19, 2011 9:05PM
avatar
Ok,,,, GAP if you are listening.... here goes!  The economy is bad, and has been bad, instead of putting a ton of crappy clothes on clearance... why don't you give us quality clothes at a fair price.
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.

May 19, 2011 6:11PM
avatar
I was at a Gap Outlet last week and was surprised at how much the prices have risen since I'd last been there. I walked over to a clearance rack that had a "Save an extra 30%" sign on it. Problem was, the rack was full of shirts priced at $34.99! Too expensive and the quality of the clothing seems to be less than it once was...
May 19, 2011 8:11PM
avatar

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.

May 19, 2011 5:59PM
avatar

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.

May 19, 2011 8:37PM
avatar
It's nearly impossible to find a decent quality t-shirt that is not sheer, not tapered at the waist, not cap sleeves but still has a stylish neckline.  Women over 40 often need a t-shirt that is a little forgiving but does not push us out to pasture. GAP needs a stylist who is a slightly out of shape woman over 40.  Kill the cap sleeve and the low-rise jean.  Bring back excellent soft cotton and slightly funky styling.  Please!  Women over 40 will flock to your stores!!
May 19, 2011 8:33PM
avatar
@ Libbey...could you sound a little more snotty?  In this crappy economy, most of us can't afford new clothes just for the fun of it, let alone be so la-de-dah about our shopping choices.  By the way, if your daughter was a teen in the 80's...it was more than a few years ago.  It was more like 30...so I might not be rich, but I sure am not as old as you either.  I'll stick with my cute tops from Target, and you can keep shopping exclusively @ Nordstroms, with the other blue-haired old ladies.


May 19, 2011 4:38PM
avatar
And they are constantly changing the basics that sell. I used to buy jeans there, but they changed the style I wore 2 years in a row until they finally didn't fit right. WhenI would go in I would purchase other things. Now I refuse to even go in. I gave up and moved on to Old Navy. (Though they can't seem to keep what they advertise stocked... which is a whole other issue)
avatar
I agree with the sentiment that the staff is kind of rude.  They definitely don't seem to value customer service.  I love GAP jeans, but they are sooo expensive!  I almost never buy shirts from there..they are generally shapeless, boring and really pricey.
May 19, 2011 7:16PM
avatar
The sizing is way off now at all 3 stores.  I haven't changed more than a couple of pounds but for the last couple of years I cannot find anything that fits me.  I think that they think we are all 5'11 and with a long torso.  Even the petites are way too long for me and I am 5'4.  The shirts look like tunics on me.  I like the neutral colors but the styles have just gotten weird. If I wanted super-trendy I would go to a teeny-bopper store.  I want to go to work and look decent, not like I am trying to be 16 again.  I received a gift card to the GAP at X-mas time and I went to all 3 stores.  Believe it or not, nothing fit.  It was depressing and I finally ended up at Athleta.com where I had to deal with online sizing and guessing.  :(  
May 19, 2011 7:42PM
avatar
GAP clothing line has become dull & boring -definitely not worth the High Price!  Clothes fades easily....
May 19, 2011 6:33PM
avatar
I was a vendor to the Gap for several years. The reason the Gap is hurting is their culture. The top Execs throw the lower level people under the bus for every operational and design problem, while they take home big bucks. Plus the arrogant 20 somethings who work there blame their vendors for their mistakes. I use to enjoy buying Old Navy but hey did away with the quality shirts and jeans and replaced them with junk in colors I would never wear. Until the culture and quality at the Gap changes they will continue to slide toward oblivion. Frankly I think it would be just karma if they disappeared into history for the hell the Gap put me through.
May 19, 2011 7:04PM
avatar
I NEVER shop at Gap. Overpriced, plain clothing,no charm or enjoyment to even go in.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

133
133 rated 1
286
286 rated 2
441
441 rated 3
737
737 rated 4
614
614 rated 5
606
606 rated 6
621
621 rated 7
441
441 rated 8
317
317 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.