Gap Inc is America's biggest clothing retailer, offering distinctive casual clothing through three main retail brands of The Gap, Banana Republic and Old Navy. In 2019, it announced plans to split into two separate companies, separating faster-growing Old Navy from the other brands. However those plans were abandoned in 2020. 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 has been women's fitness brand Athleta, now predicted to reach $1bn in sales in 2020. The newest is online-only men's sportswear brand Hill City, launched in 2018. The group's 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; Robert Fisher, son of the group's original founders, is non-executive chairman. In 2019, the company will celebrate the 50th anniversary of the Gap brand, launched in 1969 in San Francisco by Don and Doris Fisher. By the beginning of that year, there were 3,666 stores in 43 countries. Group revenues for ye 2019 were $16.6bn, with net income of $1.0bn. Old Navy contributed sales of $7.8bn, Gap $5.2bn and Banana Republic $2.5bn. North America accounted for almost 88% of combined revenues; what was at one time a sizeable international retail footprint has been scaled down significantly since 2016.
Capsule checked 19th October 2018
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Historical profile information for Gap Inc
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.
Adbrands Daily Update 8th Nov 2019: Gap CEO Art Peck is leaving the group with immediate effect following another quarter of weak sales across all three main brands. Global comparable sales for Gap fell 7% and Banana Republic was down 3%. Even Old Navy, generally the group's best performing brand, dropped 4%. Group chairman Robert Fisher, also son of the company's founders, will step in as interim CEO. Plans to spin off Old Navy as a separate company are expected to continue though no timetable has been confirmed.
Adbrands Daily Update 1st Nov 2019: "The Hoodie". Creative hotshop Johannes Leonardo is developing a bit of a reputation as the "fresh start" agency for brands that need to reinvent themselves one way or another. The most notable example is VW, for whom JL has delivered a series of striking, often quite arty films over the past few months, as the German carmaker strives to put its diesel cheat scandal firmly behind it. Latest recipient of JL's creative pixie dust is struggling clothing chain The Gap, whose newly appointed CMO Alegra O'Hare is taking it in a very different direction with this mother-and-son heartstring-puller. Gone are the cool model kids dancing in denim (for now at least) in favour of characters who are arguably rather closer to Gap's actual target market. To be honest, we've seen this type of ad plenty of times before (we were immediately reminded of 'Be The Gift' a spot Mother made for Nokia mobile a couple of years back). But that doesn't detract from the Gap spot's charm or emotional richness. It's a lovely little film; we hope it helps to turn around Gap's otherwise steady decline.
Adbrands Daily Update 1st Mar 2019: Struggling Gap Inc announced plans to split in two, liberating the fast-growing Old Navy business from the group's other brands, led by hard-pressed Gap and Banana Republic. Old Navy will become a separate publicly traded company led by current divisional CEO Sonia Syngal. The remaining brands will continue to be run by group CEO Art Peck, but corporate entity Gap Inc will adopt a new name. "It's clear that Old Navy's business model and customers have increasingly diverged from our specialty brands over time," said group chairman Robert Fisher. There is comparatively little overlap in customers between Old Navy and the current group's other brands, which do share many of the same customers. That might allow the slimmed down parent to consider combining all its remaining brands and store under a single retail banner.
Adbrands Weekly Update 22nd Nov 2018: Quarterly results from Gap Inc revealed solid performance from Old Navy and Banana Republic, with same-store comps up 4% and 2% respectively, but dismal numbers from The Gap, where sales slumped by 7%. The group's overall performance was, as a result, flat. "We are clearly not satisfied with the performance of Gap brand," said CEO Art Peck. He told analysts that the group is considering a radical cut-back of the Gap physical retail estate, which could involve the closure of "hundreds of stores that likely don't fit our vision for the future of Gap brand, whether in terms of profitability, customer experience, traffic trends... and/or near- and long-term relevance to the brand. These stores are a drag on the health and the performance of the brand." More details will be forthcoming in due course.
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