US apparel retailer Gap says it is weighing options for its international Banana Republic and Old Navy store networks.
Gap CEO Art Peck says the company won’t reveal any other details at present, but expects to comment more when it reports its quarterly results on May 19.
“The company is evaluating its Banana Republic and Old Navy fleets, primarily outside of North America, in order to sharpen its focus on geographies with the greatest potential,” the company said in a statement.
Gap shares fell in after-hours trading on Monday night US time after it revealed a 7 per cent decline in same store sales in April. Analysts had been expecting growth of about 0.5 per cent after signs the retailer was slowly getting back on track in recent months.
Total sales for the month were US$1.12 billion, down from $1.21 billion last year. First-quarter sales totaled $3.44 billion, down 6 per cent from $3.66 billion year-on-year.
While Gap did not specifically refer to Asia in its reference to reviewing the future of its international business, the company has met with mixed results in the continent.
While its namesake brand holds its own in most markets, the success of Banana Republic and Old Navy, the higher and lower end sibling brands respectively, have been patchy.
Globally, during the first quarter, Banana Republic sales fell 11 per cent versus 8 per cent last year while Old Navy sales fell 6 per cent versus 3 per cent growth last year.
This week, Peck said the company was “committed to better positioning the business to recapture market share in North America and to capitalising on strategic international regions where there is a strong runway for growth”.
Analysts seem in concord that Gap has lost its way in its core US market.
“Gap used to be a core, basic, apparel retailer with low prices and great product for the family,” Deutsche Bank retail analyst Paul Trussel told CNBC Tuesday. “I think there’s other retailers that frankly have taken that place within the retail sector.
SW Retail Advisors President Stacey Widlitz added: “If you have been into a Banana Republic or a Gap, in the last six months, you know… the fits are wrong, the stripes are wrong, the florals are wrong. This is a largely self-inflicted problem. Yes, mall traffic is down; yes, the consumer is spending less on apparel, however, if you choose not to get your fashion correct, and also not keep up with your supply chain and fast fashion, that is not going to help the situation.”
