Banana Republic Brand President To Leave Gap
Gap Inc. (NYSE:GPS), on January 24, announced that Andi Owen, global brand president of Banana Republic, will be leaving the company in late February. While the company is conducting a search to find the brand’s next president, Gap’s CEO Art Peck will directly oversee the brand in the meanwhile. Owen has been with the company for 25 years, and has played a number of key roles across Banana Republic, Old Navy, and Gap during that time.
See our complete analysis for Gap Inc.
Downward Spiral In Sales
Banana Republic can be identified as the weak link for the company, as the company has seen an extended downward spiral in sales. Lackluster product assortment is pushing customers away from the brand, and the consumers are unwilling to pay the premium prices it once commanded. Consequently, it is falling into the same trap as Gap, by resorting to discounting and deals to get rid of the built up inventory. In May, the company had warned of weak sales across its portfolio, and noted steps would be taken to streamline its business. This included evaluation of its Banana Republic and Old Navy operations outside North America. Further, in Banana Republic and Old Navy, the company has made adjustments to the ticket prices, where it was felt that the initial prices weren’t competitive. CEO Art Peck is also following in the steps of his predecessor, Glenn Murphy, by focusing on speeding up the production time and improving the supply chain. The company has also been looking to work on its processes in order to quickly react to the changing fashions. This would help them to better compete with fast fashion retailers, such as H&M and Zara.
Despite these steps being undertaken, Banana Republic has not shown any signs of a turnaround. During the month of December, which is key in the important holiday quarter, the brand again stumbled, after a positive showing in November, which had occurred after over a year of negative comps. The comparable sales declined 7% in December as compared to the same period last year, when the comps declined by 9%.
Poor Showing With Millennials
A study conducted by RBC Capital indicates that reversing the situation that Banana Republic finds itself in will not be easy. In the survey it was found that 48% of millennials disliked the brand, as compared to just 22% who said they liked it. The brand didn’t do that well with non-millennials either; 53% of non-millennials surveyed disliked the brand, as opposed to 18% that viewed it favorably. The older, non-millennial audience was more likely to shop at traditional retailers, such as Kohl’s, J.C. Penney, Macy’s, T.J. Maxx, Ross Stores, and Burlington. The survey goes on to show that 75% of respondents never shop at Banana Republic. Meanwhile, Gap and Old Navy fared better; about 40% of millennials dislike the Gap division, versus 35% who like it, while 39% of non-millennials hated the brand and 29% viewed it favorably. Old Navy was the clear winner, with 53% of millennials liking the brand versus 23% disliking it. Non-millennials were fine with the brand too, with 45% viewing it favorably, and 31% not. The brand’s value positioning is working in its favor, while Banana Republic’s higher price points are working against it.
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