Dive Brief:
-
Gap Inc. Thursday reported another quarter of struggling sales, except, once again, at its Old Navy brand. Overall company sales decreased 2% to $3.9 billion. Overall Gap sales fell 6%, Banana Republic sales fell 4%, but sales at Old Navy increased 3%.
-
It also said that its move to close 175 North American stores and others overseas will cost less than expected — closer to $130 million to $140 million than its previous estimate of $140 million to $160 million— and the company reiterated its outlook for the year.
-
The company also said it’s experimenting with a fast-fashion approach, a quick replenishment of best-selling items that has worked at its Old Navy brand, at its Gap stores as well.
Dive Insight:
Gap Inc. has struggled mightily to regain its status as a go-to brand for basics, failing to gain shoppers’ attention as it’s pivoted to more high-fashion looks. But while some apparel retailers have slowed down their inventory turnover in order to avoid huge markups, Gap is moving in a different direction that has been successful at Old Navy.
The company is experimenting with quickly getting more inventory of best-selling clothes into stores and clearing out lagging inventory, a system that has been perfected by fast-fashion retailers. Spanish brand Zara, for example, which is credited with inventing the model, keeps a close eye on the latest styles, churning out clothes in small batches so that it’s always ready to flood its stores with another wave of on-trend merchandise. Zara develops 10,000 new items each year, and has perfected the process of getting styles from the runway to the rack in record time.
It’s not clear that Gap is aiming to amp up that much. But Old Navy’s success is due to its inventory management, as well as the excellent grades it’s getting on its fashion and marketing since the arrival of former H&M executive Stefan Larsson.
“I saw an unpolished diamond in Old Navy,” Larsson told the New York Times earlier this year. “Everything starts and ends with product.”
