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Gap's Newest Store, Forth & Towne, Opens







By Matt Krantz, USA TODAY


Hoping to fill a gap in its lineup of apparel as well as its financial performance, Gap (GPS) is opening the flagship location of its first new chain in more than a decade.


Forth & Towne, Gap's newest store brand first announced last September, aims at the key group of women 35 and up who seem to be turned off by traditional department stores. The first store, 30 miles from Manhattan in the Palisades Center in West Nyack, N.Y., will feature 8,000 square feet of apparel.


The success of the Forth & Towne concept is critical for Gap, which has been struggling to regain growth. Last fiscal year, the company grew just 3%, which is well below the company's roughly 18% average annual growth in the early 1990s. Meanwhile, Chico's (CHS), a retailer targeting 35-and-up women, grew 39% last fiscal year.






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The New York Forth & Towne store will be followed by four more this year in the Chicago area, five more in 2006 and 20 more in 2007. Gap is keen on the demographic because it says women in this age group are expected to be the biggest clothing buyers by 2010, have the highest average income of any group of women of any age and buy 39% of all women's apparel.


It's also a segment the traditional Gap brand store isn't angling for. Gap stores have only 3% market share of shoppers 35 and up. That's less than half its share of consumers under 35, says Stacy MacLean, Gap spokeswoman.


To lure this new demographic for Gap, Forth & Towne will depart from the traditional khaki-pants-filled Gap store and be separated into areas aimed at four types of female shoppers, says Christine Chen, analyst at Pacific Growth Equities.


The "Allegory" section will offer tailored and conservative apparel suited for the office, in a direct shot at Talbots, Chen says. Artsy dressers will find knits and pants with prints in the "Vocabulary" part of the store. The "Prize" portion will contain clothes for the "feminine and flirtatious" — meaning tighter clothes for the "fashionista" dressers, Chen says. Lastly, it wouldn't be a Gap store without the turtlenecks and "casual American style" clothes in the "Gap Edition" part of the store, she says.


Chen says this "store within a store" approach hearkens back to the department store of the 1950s, when the mix of products was more consistent, she says.


It's unclear, though, how quickly, if at all, the new Gap concept can pose a threat to Chico's, says Liz Pierce, analyst at Sanders Morris Harris.






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Gap needs it to work. Sales collected by Gap's fleet of more than 3,000 Gap, Banana Republic and Old Navy stores, were flat during the most recently completed quarter, ended July 30, despite an increase of 19 stores in the period.


Fueling fears about the company's future, Gap also warned that mid-August sales are coming in below expectations. That forced the company to cut its estimate for earnings this year by 14 cents a share to a range of $1.30 to $1.34.


Traditional Gap consumers are "bored," says Kurt Barnard, president of Barnard's Retail Consulting Group.


Investors are, too.


Shares of Gap are down 8% this year, much worse than the 1.8% fall of shares in the broad Standard & Poor's 500 index.


"What the Gap is doing is not only what it must be doing, but what it should have done a long time ago," Barnard says.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.