Gap to shift focus to Old Navy, Athleta

gapGap Inc says it will shift its focus to its growing brands Old Navy and Athleta, and away from Gap and Banana Republic.

The company said on Wednesday it will close about 200 Gap and Banana Republic stores in the next three years and open about 270 Old Navy and Athleta stores during the same period.

Low-priced Old Navy has been a bright spot for the clothing retailer, posting rising sales even as they fell at the Gap and Banana Republic.

The company says Old Navy is on track to surpass US$10 billion (A$13 billion) in sales in the next few years. And Athleta, which sells athletic clothing, is expected to exceed US$1 billion in sales. The company expects to reap about US$500 million in savings over the next three years by better taking advantage of its scale.

The moves are the latest to reinvent the chain and are being spearheaded by chief executive Art Peck, who took the helm in 2015. The company is facing the same problems as other fashion retailers, as shoppers buy less clothing in general and shop more at off-price chains or buy online when they do. That has resulted in sluggish traffic at the stores.

But Gap Inc also has long struggled with its own problems, mired in a sales slump as its clothes don’t stand out in an overcrowded landscape.

Gap has been offering frequent discounts to get shoppers to buy. It’s also been working hard to improve fit – a problem that has long bedevilled the retailer- and it’s been trying to rework its fashions. The company has been cutting its store numbers over the past few years.

“Over the past two years, we’ve made significant progress evolving how we operate – starting with getting great product into the hands of our customers, more consistently and faster than ever before,” said Peck, president and chief executive officer, Gap Inc.

“With much of this foundation in place, we’re now shifting our focus to growth. We will leverage our iconic brands and significant scale to deliver growth by shifting to where our customers are shopping – online, value and active.”

The company said it expects about $500 million in expense savings over the next three years by better leveraging its size and scale, cross-brand synergies and streamlining operations and processes.

 

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