Gap Inc is America's biggest clothing retailer, offering distinctive casual clothing through three main retail banners of The Gap, Banana Republic and Old Navy, supported by a collection of mostly online brands. In the 1990s, the Gap brand gradually conquered the globe, eclipsing more established manufacturers such as Levi's with its stylish but affordable designs. Between 1996 and 1999 revenues and net income both doubled as the group extended its format into new brands and new territories. Buoyed up with its own success, the store arguably lost sight of its core values, and an attempt to move further upmarket led to sharp falls in performance from 2000 onwards. A return to basics at the Gap brand prompted a brief recovery in 2003 and 2004 before sales went into another sharp decline from 2005. Repeated attempts to regain momentum have met with only short-lived recovery. The group continues to deliver flat performance and it was toppled as the world's biggest clothing company by both Inditex and H&M. Conditions have remained challenging, especially at core chain The Gap, which has been steadily eclipsed by more mass-market Old Navy, now the group's biggest brand by far, accounting for more than half of US sales. Other retail launches - such as Forth & Towne and Piperlime - have come and gone without adding significantly to revenues. The longest-lasting of these has been women's fitness brand Athleta, now likely to top $1bn in sales in 2020. Several other brands have come and gone. The most recent was men's sportswear brand Hill City, launched in 2018, but shuttered two years later in the wake of Coronavirus. Children's brand Janie & Jack was acquired in 2019. Also in 2019, the group announced plans to split into two companies, separating faster-growing Old Navy from the other brands. That strategy was abandoned in 2020. Prolonged weakness has led to a revolving door of divisional managers and marketers over the past decade. Art Peck replaced Glenn Murphy as CEO in 2015, but left the group four years later. Sonia Syngal is now CEO. Robert Fisher, son of the group's original founders, is non-executive chairman. In 2019, the company celebrated the 50th anniversary of the Gap brand, launched in 1969 in San Francisco by Don and Doris Fisher. By the beginning of 2020, there were 3,920 stores in 43 countries. Around 575 international stores are operated by franchisees. Group revenues for ye 2020 were $16.4bn, with net income of $351m. Same-store sales for all three lead brands fell by single-digit percentages, with only Athleta registering an increase. Old Navy contributed sales of just under $8.0bn, Gap $4.6bn and Banana Republic $2.5bn. The US alone accounted for almost 82% of combined revenues and Canada for another 7%; what was at one time a sizeable international retail footprint has been scaled down significantly since 2016, or transferred to franchisees.
Capsule checked 9th September 2020
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Historical profile information for Gap Inc
Adbrands Daily Update 22nd Oct 2020: Long-suffering Gap launched a strategic review of its operations in Europe, which is likely to result in either a transfer of the business to a franchise partner or, at worst, full closure of both its traditional retail network and also ecommerce. Europe currently accounts for just 2% of group revenues. "One of the options being explored is the possible closure of our company-operated Gap stores in the United Kingdom, France, Ireland and Italy at the end of the second quarter in 2021," said the company in a statement. "In addition, we are reviewing our warehouse and distribution model and our Gap and Banana Republic company-owned e-commerce operations in Europe. A possible outcome is the closure of our EU distribution center in Rugby." The group already operates 400 stores in 35 countries and 14 ecommerce sites through franchise arrangements.
Adbrands Daily Update 29th Jun 2020: Gap announced a major new partnership with rapper and entrepreneur Kanye West and his fashion label Yeezy. The two businesses will combine their resources to launch a Yeezy Gap clothing line in Spring 2021. This is no one-off collection. Though terms were not officially disclosed, insiders say the partnership will run for at least five years, by which time the new label is anticipating sales of $1bn a year, or more than a fifth of Gap's current total. West's existing Yeezy sneakers partnership with Adidas already generates more than $1bn in sales per year, though prices are significantly higher than most current Gap merchandise. West once worked in a Gap store and has often expressed his interest in the brand. In 2015, he told Style.com that, before he was famous as a rapper, "one of my dreams was to be the head creative director of the Gap. I'd like to be the Steve Jobs of the Gap … [I want] full Hedi Slimane creative control of the Gap."
Adbrands Daily Update 24th Apr 2020: JC Penney was already struggling before the Coronavirus pandemic, and enforced lockdown has provided the final nail in the coffin. The store was reported today to be in advanced talks with its lenders, who include three of America's biggest banks, for a managed bankruptcy filing. Penney's is likely to be followed by others. Neiman Marcus is also considering emergency options including sale or a bankruptcy filing. Gap, too, warned it will need to raise additional cash. It said it has already burned through half its available cash reserves, even after skipping April rent payments.
Adbrands Daily Update 6th Mar 2020: Gap Inc named insider Sonia Syngal, currently head of Old Navy, as its new CEO. Syngal has been leading the group's biggest business for the past four years, boosting its footprint in North America as well as its ecommerce business. However, even Old Navy has suffered the weakness afflicting other chains within the group in the past year, with comparable sales falling in all three quarters of the current financial year. Robert Fisher has been interim CEO since Art Peck departed the group last year. He will now also surrender his role as non-executive chairman - to former Walmart executive Bobby Martin - though he will remain on the board.
Adbrands Daily Update 17th Jan 2020: Gap Inc's plans to spin off Old Navy as a separate traded company, first announced last March, have been abandoned. Several factors were cited, but the most pressing has been a slowdown in performance at Old Navy over the past nine months, and continuing declines at the other brands. At the same time, the company announced the departure of Gap brand CEO Neil Fiske. His role is assumed by Mark Breitbard, previously CEO of Banana Republic. He now takes charge of all the group's "speciality" brands, partnering Old Navy CEO Sonia Syngal.
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