GAP Inc. stock is down over 10%
after they released news they missed guidance for April. GAP already had forecasted
sales to be poor, so the market didn’t take this news lightly (Forcast: GAP +0.4%, Old
Navy -0.1% & Banana -5.9%(Fortune.com)). GAP’s comparable
sales actually fell 4% last month, Old Navy
dropped 10% and Banana Republic by 7% (Fortune.com). This is
the company’s 13th straight month of declines, and the Stock is now
50% of its 52 week high.
The company has been falling apart, and has been having trouble holding its talent. In the last year and a half, they have lost CEO’s for all three of their brands (GAP, Old Navy and BR (Fortune.com)). The company reports earnings May 19th, and they alluded that they would be announcing store closings in Europe and Asia (Fortune.com). After last year’s plan of announcing 175 store closures in North America its clear the Company is significantly reducing its brick and mortar footprint (Fortune.com).
The digital world we live in is adding pressure to a lot of retailers, and GAP is a prime example of this. “Our industry is evolving and we must transform at a faster pace, while focusing our energy on what matters most to our customers,” said Art Peck, chief executive officer, Gap Inc. “We are committed to better positioning the business to recapture market share in North America and to capitalizing on strategic international regions where there is a strong runway for growth.” (www.gapinc.com).
It will be interesting to see how they use social media to help them, navigate these waters. At a glance I noticed, last month they ran campaign on YouTube was with a big Influencer Ellen DeGeneres. However, Ellen was not enough to help boost sales for GAP this April.
GAP has a large online presence, and even through they are active with social media marketing, sometimes that isn't enough if the economy isn't supporting you... Bloomberg suggests that GAP and other retailers are struggling to see growth due to the US's lack of Income growth over the past few years (Video: Bloomberg).
This is sad - I worked for Gap Inc through college, just as a part time retailer at Banana Republic to help pay for school, and it's the first big corporation I worked for. It taught me so much, and it's one of the reasons I was able to succeed in being a retail manager after college which gave me the opportunity to work full-time and figure out what I actually wanted to do. (Cut to me today working my 2nd week at a marketing firm and loving it!)
ReplyDeleteI don't think they have enough of a niche as a retailer to survive. I have watched the quality of their clothes drop and their prices increase, and they are stuck in that middle ground of not being designer, but at the same time not cheap enough to be a bargain. People either want expensive designer good quality pieces, or cheap unique pieces like H&M, and Gap Inc has had trouble fitting into either of those categories. I don't see them getting out of this one without a major overhaul.