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Gap Plans to Focus on Faster Fashion and Activewear as Sales Keep Sliding

The retailer didn't buy deeply enough into off-the-shoulder this spring, says CEO Art Peck.
Gap's fall 2016 campign. Photo: Gap

Gap's fall 2016 campign. Photo: Gap

Is Gap a basics brand, a fast-fashion brand or an athleisure brand? Based on its latest earnings report, it wants to be all three.

The last time we checked in with Gap, Inc., CEO Art Peck laid out some new plans for a much-needed return to sales growth. On Thursday afternoon, Peck said the company was making progress, though the numbers for the second quarter of 2016 didn't show very much: For the company as a whole, comparable sales (meaning at stores that have been open at least a year) were down 2 percent, which is the same percentage by which comp sales decreased the year before. Gap brand saw a 3 percent decline versus a 6 percent decline last year (so, a small improvement). Old Navy saw flat sales versus a 3 percent increase last year. And the perennially ailing Banana Republic saw a 9 percent decrease versus a 4 percent decrease last year. Ouch.

As for Banana, Peck said that was "nowhere close to the performance that the brand is capable of, nor what we expect and want to hold it accountable for," adding that there were "some proof points" that what they're doing is working, though "not significant enough to manifest themselves on the top line or the bottom line." 

Regarding Gap, Peck says the company is doing some "extremely aggressive work," including "following Old Navy's lead on demand-driven buying," meaning restructuring the supply chain so that Gap is nimble enough to produce inventory based on customer demand, and not end up with excess product. He also feels Gap did not buy deeply enough into its trendier, more fashion-y pieces this spring and summer — specifically lace and eyelet tops and off-the-shoulder items — which "were in the stores and gone in a heartbeat." That stuff didn't meet demand, while basics and knits, apparently, exceeded demand. We'll see "more depth in fashion" as we move into September, he added. Those comments and plans to turn new product around more quickly suggest Gap is working to compete more directly with the fast-fashion companies eating away at its market share.

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Throughout the company, Peck also wants to make a big investment in activewear, where he expects to see continued growth. In addition to Athleta, Gap and Old Navy each sell their own activewear, and Peck said the company plans to incorporate activewear innovation into ready-to-wear. (For example: Incorporating stretch into denim and button-down shirts and using both moisture-wicking and stain-resistant fabrics in new ways.)

Aesthetically, we've seen Gap try quite a few different strategies over the years, from the appealingly simple, casual basics of its heyday, to the fashion-forward designs of Patrick Robinson, to Rebekka Bay's very brief tenure as creative director — during which we saw only a suggestion of her sleek, modern vision for the brand. Right now, Gap's priority isn't exciting fashion fans, but rather delivering sales growth by making product that sells, fits and is in the stores it needs to be in when it needs to be there.

And if the clothes are lacking in inspiration as a result, at least the brand's latest ad campaign is kinda cool.

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Homepage photo: Ben Pruchnie/Getty Images