Plana Gap to save itself: decline


NEW YORK (CNN) – It was last understood not later than the 1990s.

It's the biggest beat cool selling sales forty years ago. He took advantage of the promotion of shopping centers in the second half of the twentieth century and won everyone, from teenagers and mothers to celebrities such as Sharon Stone.

But Gap has been built for years, and it has been stressed on Tuesday with a 7% drop in sales during the last quarter compared to the same time last year.

Gap built her status to sell her sweatshirts with her logo, turtleneck shirts and basic fashionable clothing at prices awesome. However, that model is at risk now that there has been more market options than ever before.

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"They were working at the time the head of the shop was on the king, and only a few people had a choice of fashion," said Simeon Siegel, a retail analysis at Nomura Securities. "Now, anyone with Instagram has the right to comment on fashion."

Ghap CEO Art Peck joined a conference call with analysts on Tuesday that his company thought it could solve problems by doing so; adds more choices to its stores, entering new markets and its; sales increase. "At times, we have pulled our fingers and we hope we will grow from the problem," he said.

But not now. Gap recognizes that it is too big and never before.

On Tuesday, his company explained a new plan for aggressive closure down low sources. By removing the curb it may indicate turning for its & # 39; gap and stop being completely extinct.

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The worst food performance

The fall in Gap is in the last quarter, which was even worse than the JCPenney or Victoria's Secret, and # 39; come at a time when retailers exploit a strong US economy and Americans will spending more than everything from clothes to new TV

Their problems also have a & # 39; compares the clear spots in other parts of the company.

Old Navy's largest selling brand, Gap brand largest, 4% in the last quarter. Old Navy will build new stores and reaches $ 10 billion in sales over the next few years. The sports series is very fashionable, orrevitalization & Female Gap athlete, athletic, is also expanding, and his & her; The company expects to reach $ 1 billion in sales.

The company has successfully successfully successful Banana Republic under new management, and in particular by closing weaker sources. The Banana Republic has reported four consecutive quarters of similar sales growth.

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Old Navy, Athletic and Banana Republic come together to represent almost 70% of the company's sales of almost $ 16 billion, and they are in a very fine shape.

"It's a machine in Old Navy," said Jeffery analyst Randal Konik in a Wednesday search note. "Athlete is a car important for long-term growth."

But there are years of modifications and landscape of modification to the tax on the main Gap flag.

Missed opportunities

"The manager lost the idea of ​​the merchants and competitions," said Wendy Liebmann, strategic consultant director of WSL.

Lost to interact with baby boomers to grow with its brand and not dragged it small years who drives the current fashion trends. At the same time, retailers such as Levi, Target and fast fashioned retailers such as H & M and Zara bought merchants from denim of Gap with cheaper prices and more modern styles.

"They even carried themselves, selling many of the same styles in the Old Navy and Banana Republic," he said.

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Gap has a problem to demolish his record. It offers a lot of things, a & # 39; including three times higher than costumes, and the prices are too high. Marketing mistakes and company prices are n u00b u200b; emphasizing its profit, because it has to visit major discounts for sale.

"Gap's flag icon is still strange and does not bring anything new or interesting to the market," said Neil Saunders, managing manager of GlobalData Retail. "The materials are still identical and complex."

In addition, Gap did not have the right plan to take advantage of the huge chance of moving to revitalization. Despite the success of the Athletic, the company did not do much to solve the problem in the & # 39; his main business. Earlier this year, Gap introduced an active line for the men.

Jeff Kirwan, Chief Executive of his Member, leaped his earliest appointment this year. The company replaced Kirwan with Niall Fiske, a member of the Billabong Action Group that helped him Bath & Body Works development.

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Growth is growing

The second half of the benefits comes from online and store systems place. Both sectors grow and profit.

But there are more than 1,000 main sources around the world – many of them are in the near marketplace – representing another half of the business. At the beginning of November, Gap had around 800 stores in North America.

Peck believes that Gap resources account is not currently profitable, and its # 39; explains Tuesday plans to close hundreds of them quickly. By doing actions, called "delay," the company could save up to $ 100 million in profits and increase healthier sources.

"We have a lot of sources in the lower half of the fleet that has been going down over time," he said. "I strongly believe that we have been abolished and we have learned about downdated users and has a bad impact on health of brand. "

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Gap recognizes that this has grown too wide and revenue has risen. Broadcasters say that the plan for blocked stores could help to be a long-term sustainable business.

"Hard sources should not be able to eliminate a significant loss, but it should also build the organization's position and allow guidance to focus on the ones to achieve better," Konik said.

A similar strategy has been working for chains such as Ralph Lauren and Michael Kors. The two reduced the menu quickly, but that was due to pay for less clothes; Going to higher prices, Siegel said.

"The bigger bands recognize you can be healthier if you're smaller," he said. "Employment can increase if sales are down."

He liked Wall Street as there are smaller smaller sounds. Increase price sharing up 5% Wednesday.

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