Dive Brief:
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Gap Inc. Thursday saw Q3 net income fall to $248 million, or 0.61 cents per share from $351 million or 0.80 cents per share year-over-year. The strong dollar, especially against the Japanese yen and Canadian dollar, cost the retailer Q3 sales of about $100 million, the company said.
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Old Navy continues to be the company’s strong suit, with stable inventory and fast-fashion-style lead times heading off the need for promotions. Q3 Old Navy same-store sales rose 4% and sales increased to $1.62 billion.
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But Gap brand same-store sales fell 4% and Banana Republic same-store sales fell 12% in Q3. Overall Q3 same-store sales fell 2%.
Dive Insight:
With a lot of turmoil in the last several quarters, Gap is still in search of a design approach that has eluded it since its glory days of the eighties and nineties. Gap’s embrace of so-called “normcore,” for example, was a failure almost as soon as it began, possibly due to the recession, or the convoluted rules of the movement, or perhaps Gap’s inability to get it right.
And the brand has had difficulty rectifying its mistakes. Gap’s high-profile appointment of Rebekka Bay, brought on to help the retailer with its fashion mix, was short-lived when new Gap Inc. CEO Art Peck let her go earlier this year. The company had already begun its repairs to those mistakes this summer, tapping design and merchandising veterans Steve Sare, most recently at UNIQLO, and Alessandra Brunialti, who had been at Banana Republic from 1995 to 2011, and has also worked at alice + olivia, Calvin Klein, Vince inc., and Nicole Miller in design and product development.
Stefan Larsson's departure from his position as president of Gap Inc.'s Old Navy brand to become CEO of Ralph Lauren has also raised questions about how the company can sustain the strength of its most successful brand.
Gap CEO Art Peck is asking investors to be patient for spring.
“Old Navy delivered another consecutive quarter of growth,” Peck said in a statement. “Gap has made clear progress on its transformation agenda and we look forward to introducing customers to the brand’s spring collection, which embodies elevated American style.”
