Gap Unveils Plan to End Sales Slump
In an effort to draw shoppers back to Gap, the retailer said Tuesday that it would spiff up its stores, reorganize the merchandise and beef up its advertising this fall. As part of the makeover, the company hopes to get more “freshness and newness” into stores more often, said Cynthia Harriss, president of San Francisco-based Gap Inc.’s namesake division.
Industry analysts say the changes couldn’t come too soon for the stores that have been in a sales slump. Pat O’Hare, with market analysis firm Briefing.com in Chicago, said, “Anything will help Gap at this point. They need to do something to really improve the store experience.”
The nation’s largest specialty apparel retailer, which operates about 3,000 Gap, Old Navy and Banana Republic stores, has been struggling for much of the last two years. Same-store sales, or sales at stores open a year or more, have declined for 21 of the last 24 months.
In the fourth quarter, Gap’s profit slid 17% as sales slipped 5%.
During an earnings conference call last month, Chief Executive Paul Pressler said the retailer believed in its product and its strategies and would “fight every single day” to win back the confidence of its customers.
Management has anticipated that business would begin improving in the second half of this year. In a report last month, analyst Todd Slater, with Lazard Capital Markets, said Gap had a “reasonable chance at a second-half recovery.”
Harriss said products would be pulled together this fall in groupings that highlight denim, T-shirts and active wear, such as sweatshirts and fleece bottoms. Speaking at the Piper Jaffray Consumer Conference in New York, she said a fourth “shop” within the stores would feature apparel such as khakis, skirts and woven tops.
Design and merchandising teams are being organized around those categories, which should allow the company to get more “freshness and newness” into stores more often, Harriss added.
Harriss said Gap had been working to reestablish the brand’s essence, creating updated classics that can form the foundation of a wardrobe.
She also presented a video highlighting the fall product line, which reflects the sensibilities of new design head Charlotte Neuville, who was hired last year.
As the new merchandise arrives in stores July 20, Gap will launch a television advertising campaign that will run for eight weeks.
TV ads heralding last fall’s merchandise ran for six weeks. Gap pulled back on its marketing during the 2005 holiday season to focus on improving its products.
Shares of Gap rose 5 cents Tuesday to $17.47.
