Several of us were discussing this a couple weeks ago. Looks like there not doing so well with there "less trendy" clothes lines.
Street Patrol The Gap has lost the young and hip
advertisement document.write('In a world of $130 jeans and trendy urban styles, The Gap is drowning in a sea of cheap denim and outdated khakis. As earnings head down, investors should shop elsewhere.
The Gap's credibility gap widened even further Thursday, when the apparel retailer slashed its full-year earnings guidance by almost 10%. For long-term, long-suffering investors this is a familiar refrain, as The Gap (GPS, news, msgs) has issued numerous profit warnings over the past several years due to one merchandising misstep after another.
Though other apparel companies are apt to fall in sympathy with The Gap over the next day or two, The Gap's problems are very much its own, and not universal. Despite what the company would like you to believe, the lousy results were not a function of consumers reigning in spending due to higher oil prices. Nope, The Gap's problem is that it is no longer a destination store for shoppers.
Looking for jeans? Unless you're over 40 or unconcerned with fashion trends, my guess is that you aren't shopping at The Gap. The "in" look in denim these days runs $130 or more -- especially for women. The Gap just doesn't serve that market, and as such it is having a hard time moving its merchandise. A promotion that cut prices on jeans to below $40 and tied the sale in with music shows just how clueless management is with regard to its customer base.
A refuge from, not for, teens One customer group that the company has struggled to win over in recent years is teen-agers. Unfortunately, this quarter's results offered little hope on that front. In fact, if you're looking to get away from all the teens hanging around the mall, The Gap is a decent place of refuge. The company's conservative styles have pushed teens to trendier stores such as American Eagle (AEOS, news, msgs), Aeropostale (ARO, news, msgs), Abercrombie & Fitch (ANF, news, msgs) and The Buckle (BKE, news, msgs). Even The Gap's Old Navy chain has failed to consistently resonate with teen shoppers.
Another problem still hanging over The Gap is the flat, tired market for khaki -- the company's big winner a decade ago. The urban stylings of bebe stores (BEBE, news, msgs), Guess? (GES, news, msgs), Kenneth Cole Productions (KCP, news, msgs) and Urban Outfitters (URBN, news, msgs) have left The Gap struggling to find a profitable niche. The Gap's Banana Republic unit tries to serve this market, but its conservative edge leaves it posting disappointing results more often than not. In the second quarter, that chain's same-store sales fell by 3%.
Frankly, after a few encouraging quarters (against very soft comparisons, mind you) it looks as though The Gap has to go back to the drawing board. Again. Management admitted as much when it noted that its summer merchandise failed to resonate with consumers, and that weak sales in August spoke poorly about how well its fall merchandise had caught on.
Cutting prices and margins The poor performance in August is not a good sign, as the back-to-school shopping season is second only to the holidays in terms of sales. If The Gap isn't scoring with consumers now, why should any of us think that it will right its wrongs fast enough to cash in during the holidays?
For The Gap to compete and win in the teen and young-adult markets, it needs to completely change its image. But changing an image that took years to cultivate risks losing the core, the older customer who has remained loyal to The Gap throughout its many ups and downs.
The Gap must also move away from the practice of aggressively marking down its merchandise. The policy has led consumers to wait for sales before buying. Note that margins slipped badly last quarter, as a lackluster response to merchandise selections led to yet another wave of markdowns.
Whatever its past success, The Gap is now a company known for unexciting merchandise at discounted prices. In the highly competitive retail apparel arena, that's not a recipe for success. Management pays lip service to altering its merchandising mix and adhering to more stringent pricing practices. But there's been so little evidence of either over the past several years that investors have no reason to wait for a new dawn.
To the contrary, the sun has set on this overstored, underperforming franchise, and investors are advised to take a cue from teen shoppers and just move on. The stock is poised for a near-term test of its 52-week low of $18.12. If it falls through that level, next stop: $17.
i dunno, i think this is a bit overstated (from a fashion perspective--i get that the earnings are falling and from a business perspective it's looking bad). i consider myself to be fairly stylish, and i own plenty of jeans from the gap, which live in a drawer with lots of friends from the "premium denim" category that cost 5x as much as they did--and i wear them just as much.
i actually have liked what gap has done recently with their new design director, although i will admit that i didn't care for their summer stuff half as much as i liked spring and last fall. i haven't tried any of the new jeans they have, but after reading the negative reviews here, i will take your word for it. it seems like they are missing the point with that, but overall i don't think they are doing that badly--maybe they just need to get some kind of a new denim concept going...?
I haven't tried any of their new styles of denim (curvy, original, or straight, I think the 3 categories are) but I just got a pair of trouser jeans from them in a dark wash and they are great! Great flap pockets that make the tush look cute, perfect length to wear with heels.....and they were marked down to $30! (I definitely agree that they are getting too aggressive with the markdowns -- no one wants to pay regular price for their things anymore, for fear of the inevitable sale!)
I used to really like Gap - they used to have cute accessories and sweaters along with a variety of denim styles. Now they've just gotten reallyyy stale. They're in no-mans-land, like they refuse to commit to anything offbeat/edgy for fear of loosing clients. It looked like they had a nice suit selection when I was in last, but isn't that what Banana is for? They need to hire some big-name designer to come in and create a new, revamped look for them!
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To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment ~ {Ralph Waldo Emerson}
They need to hire some big-name designer to come in and create a new, revamped look for them!
I completely agree. I have tried on so many occasions to like the Gap. Their commercials are so cute. I want to look like a cute little Gap-girl dancing and singing in my cute Gap clothes....I do, honest. But when I go to the store everything is so hohum.....shapeless....and made of strange unnatural fabrics that make me feel sad
They need to can some of their designers. Also, it would help if they had more smaller sizes instead of having tons and tons of XXL left on the racks! I usually don't end up buying anything because they don't have any extra smalls left. The other day I went into the outlet to buy some jeans, I only saw size 12-16? No size 0. Another factor to consider is color selection. I always shake my head in disbelief when I see more bright orange and yellow! Nobody wears these colors, it's always what's left on the clerance rack!
I like the Gap for the basics. I can't live in only designer jeans, so I like the cheaper jeans from the Gap. I just got some trouser jeans and a pair of the 'curvy' fit ones, which I like a lot. So far, they actually fit me the best. That said, if I want a piece of clothing to really stand out in, I head for Anthro.
I went in Gap this afternoon and was basically unimpressed. I did try on a cute pair of trouser jeans that fit perfectly, but I didn't buy them because I figure they will go on sale. Hmmm, that's what the article said was part of their problem.
I really thought their fall styles last year were cute, but they are just blah overall to me this year so far.
imo the problem with gap is that it's failed to distinguish itself from br & old navy. br is stylish work clothing, old navy is trendy casual clothing, but where does that leave the gap? i think of late they're really trying to focus on basics. however there sizing and fit is so off it's difficult to shop there. i'm actually one of the people who likes the direction the gap has taken this fall and i've bought more stuff from there than so far than i have in the past two seasons combined b/c they're offering a lot of basics with cute details, like that ruffled shirt they have. those are the types of things i can use to balance out my other stuff.
i personally don't really want to get trendy stuff from the gap. imo part of adding trendy stuff to your look is to separate yourself from the masses, but if you get it from the gap -- well everyone has it. but that's just my 2 cents.
I totally agree with this article. I have shopped the Gap off and on since high school (mostly on) over the years, and in the last 2-3 years, really, I have found nothing that works for me. Either the clothing is too cheaply made and doesn't fit well, or the price is right but it's just so blah.
Even BR - occasionally I find some nice things there, but I work for myself now, and they are far too conservative to suit me anymore. They remind me of Ann Taylor a lot of the time. No offense to people who like AT and BR; if I still had a corporate job, I'd still shop there plenty.
And ON is hit or miss for me too - I will buy inexpensive summer stuff there, knowing it won't last for more than maybe two seasons, but for long-term, quality items? Naah.
I have a fondness for the Gap and hope they can pull out of this tailspin. I've been around enough to remember that they've done so in the past. I'd like to see them do it again.
ETA: I do still love their jeans. They're reasonably priced (I don't do triple-digit denim) and they fit me, so I'll stick with what works.
-- Edited by atlgirl at 21:23, 2005-08-19
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