Gap Inc advertising & marketing assignments

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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, whose sales topped $1bn for the first time in 2020. Several other brands have come and gone. In recent years, men's sportswear brand Hill City, launched in 2018, shuttered two years later in the wake of the Covid pandemic. Children's brand Janie & Jack was acquired in 2019 but sold again in 2021. Affordable designer brand Intermix, acquired in 2012, was sold in 2021 to private equity following a strategic review. A plan to split into two companies, separating faster-growing Old Navy from the other brands, was announced in 2019 and then abandoned the following year when Old Navy too suffered declines in performance. Prolonged weakness has also 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. By the beginning of 2021, there were 3,715 stores in 45 countries. Of these, 615 international stores are operated by franchisees. Group revenues for ye 2020 were $16.4bn, with net income of $351m. However, the pandemic took a heavy toll on performance, with revenues for ye 2021 slumping to $13.8bn, and bottom line reflecting a $665m net loss. Same-store sales for all three lead brands fell, in the case of Gap and especially Banana Republic sharply, with only Athleta registering an increase. Old Navy contributed sales of $7.5bn in ye 2021 (down 6%), Gap $3.4bn (down 27%) and Banana Republic $1.5bn (down 42%). The US alone accounted for 84% 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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Recent stories from Adbrands Update:

Adbrands Update 27th May 2021: Gap is diversifying into home goods for the first time. It plans to launch a range of furnishings, bedding, pillows and other decorative items, and has signed an exclusive distribution deal with Walmart. The products will initially be sold only through Walmart's online channels, but will also roll out to physical retail outlets if demand is strong. The arrangement has significant potential benefits for both companies. Walmart has for years struggled to establish a presence in premium home goods and apparel, while Gap is still fighting to rebuild its relationship with consumers.

Marketer Moves 28th April 2021: New chief brand officer at Athleta. See Marketer Moves (members only).

Adbrands Update 26th Apr 2021: Gap Inc scored a huge promotional coup, poaching star gymnast and Olympic Gold medallist Simone Biles from Nike to become spokesperson for the Athleta sportswear brand. Coming just before the Summer Olympics it's a much-needed morale boost for the embattled group, whose Athleta brand is rapidly developing as the jewel in its crown. Biles will consult on capsule collections for the label, and will launch her own activewear range. "I can still remember my very first pair of Athleta tights when I was a young teenager," said Biles in an Instagram post. "They were red and I felt like I stood out from all the other girls at my gym. Little did I realize at the time that being different helped build my confidence." She told the WSJ that, in negotiations with Athleta, "I felt like it wasn't just about my achievements, it's what I stood for and how they were going to help me use my voice and also be a voice for females and kids. I feel like they also support me, not just as an athlete, but just as an individual outside of the gym and the change that I want to create, which is so refreshing."

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.

More about Gap from Adbrands Weekly Update


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