Report: Banana Republic shifting some full-line stores to factory outlets

Dive Brief:

Following in the footsteps of parent Gap Inc.’s flagship brand, which last year announced the closing of full-line Gap stores while leaving a higher percentage of factory stores still open, embattled Banana Republic appears to be shifting its emphasis to factory outlets, the New York Post reports.
Banana Republic is in the process of converting some full-line stores in the New York City area to outlet stores, targeting locations in urban shopping districts, according to the Post. Three will be converted this year, among them a store in Forest Hills, Queens.
“We always evaluate our store fleet to ensure we have the right stores in the right locations to best serve our customers’ needs,” Banana Republic said in a statement about the conversions.

Dive Insight:

Banana Republic has been a drag on Gap Inc.’s fortunes for several quarters now. While the Old Navy brand has regained its footing as the unit that buoys Gap’s results, same-store sales were down 9% at Banana Republic in the most recent quarter.

Analysts do see some signs of life there, however. “Looking to Gap and Banana Republic, we continue to see improvement in the assortments,” Guggenheim’s Howard Tubin wrote in an August blog post. “Banana Republic is delivering more commercially friendly patterns and key item offerings.”

Banana Republic is also hoping to revive its fortunes via new collaborations with fashion influencer Olivia Palermo and Cleveland Cavaliers basketball star Kevin Love. Palermo is widely seen as lending a singular influence on fashion and style at a time when few clear trends have emerged aside from athleisure wear like yoga pants, which many find adequate to wear on the street — a trend lamented by Gap CEO Art Pack last month. (Banana Republic is responding with a campaign to “Turn it up,” what the brand dubs a “call-to-action” to “make more of an effort to dress stylishly with individuality.”)

But if Banana Republic continues to shift its full-line stores to factory outlets in a major way, the company could undermine those efforts, considering how its factory stores tend to offer lower-cost, lower-quality merchandise specially made for their off-price stores.