Things are still looking dour at Banana Republic, despite Marissa Webb's attempts, creatively at least, to revive the brand. For the three months ending Oct. 31, sales at the Gap Inc.-owned retailer declined 12 percent year-over-year, after coming in flat during the same period in 2014. Although Webb's designs have been well-received by press, they've done poorly with Banana Republic customers — in a call with investors, one exec amusingly described the problem as "product acceptance challenges." It may be some time before the retailer can turn things around: Though Webb changed roles from creative director to creative adviser last month, her spring collection is already on its way to stores.
Banana Republic's sister brand, Gap, also suffered a drop in sales during the third quarter, which were down 4 percent after declining 5 percent during the same period a year ago. Like Banana Republic, Gap also eliminated its creative director role this year, ousting the much-respected Rebekah Bay in the process. Old Navy, meanwhile, continues to do just fine, with a 4 percent increase in third-quarter sales.
Overall, Gap Inc. saw its sales decline 3 percent to $3.86 billion for the quarter. In addition to poor performance at Banana Republic and its flagship Gap brand, the company also attributed its less-than-stellar results to the weakening of the Japanese yen and Canadian dollar, which cost the company $98 million. In an effort to pick up the slack from its previous quarters, executives are banking on holiday shopping sales. "With fall behind us, the teams across our portfolio are focused on strong execution for the holiday season," said Sabrina Simmons, chief financial officer at Gap Inc.