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.

Have more questions about Gap Inc? See the links below:

• Part 2: Is There A Way Out Of The Rut For Brick And Mortar Stores?
• Retailing Conundrum, Part 1: Is There A Way Out Of The Rut For Brick And Mortar Stores?
• Retail Companies Get A Boost Amid Border Tax Reform Complications
• Will Gap Inc.’s Problems Carry On In 2017?
• Distribution Center Fire And Old Navy Drag Down Sales In November For Gap Inc.
• Gap’s Sales Slump Continues In The Third Quarter
• Distribution Center Fire To Play A Dampener On Gap Inc.’s Earnings
• Gap Inc.’s Stock Rises Despite A Fall In October Sales
• How Gap Inc. Is Cashing In On The Athleisure Trend
• Banana Republic To Shutter Its UK Stores Amid A Sales Slump
• Gap Inc. Shares Soar Despite A Fall In Sales
• How Is Gap Expected To Perform In 2016?
• Gap Reports Yet Another Month Of Declining Comparable Sales
• Can Old Navy Win The Back-To-School Market?
• What Are The Problems Plaguing Gap Inc.?
• Gap Reports A Weak Outlook For FY 2016
• Fall In Sales To Weigh On Gap In The Second Quarter
• After Positive Results In June, Gap Returns To A Sales Decline
• Are There Signs Of A Turnaround At Gap, Or Is It Just A Blip On The Radar?
• Are Gap Inc’s Earnings Volatile?
• What’s Gap Inc’s Revenue & Net Income Breakdown In Terms Of Different Brands?
• By How Much Did Gap Inc’s Revenue & EBITDA Grow In The Last Five Years?
• What Is Gap Inc’s Fundamental Value Based On Expected 2016 Results?
• By What Percentage Can Gap Inc’s Revenues Grow Over The Next Three Years?
• How Are Gap Inc’s Old Navy Revenues & Earnings Expected To Grow Over The Next Five Years?
• How Are Gap Inc’s Banana Republic Revenues & Earnings Expected To Grow Over The Next Five Years?
• How Much Revenues Can Gap Inc’s Athleta Brand Add By 2020?

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