Beyond basics: 'More feminine' styles key to reviving Gap brand

Wed Jun 17, 2015 12:26pm EDT
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By Sruthi Ramakrishnan and Ramkumar Iyer

(Reuters) - The world didn't end in 2012, but things haven't been the same since then for Gap Inc's (GPS.N: Quote) flagship clothing chain.

Riding the colored-denim trend that year, the chain's sales soared to their highest in four years as young adults snapped up its distressed, skinny and cropped jeans.

Back then, Gap stores seemed to get everything right, from the colors and assortment of products to their price.

But denim's popularity began to fade in 2013, and the Gap brand's sales followed suit – ultimately leading to the company's announcement on Monday that it would close 175 of its 675 Gap stores over the next few years.

That's a start, analysts said.

Now, in a sense, the Gap division needs to do just the opposite to what it has been doing for the past few years if it is to compete not only with direct rivals such as American Eagle Outfitters (AEO.N: Quote), but fast-fashion chains such as H&M (HMb.ST: Quote), Zara (ITX.MC: Quote) and Forever 21 and big stores such as Macy's (M.N: Quote).

Instead of relying on basics such as jeans, t-shirts and shorts - which can be bought cheaper just about anywhere - the Gap brand needs to focus more on more-feminine clothing, analysts said.

"Right now what is selling from a fashion perspective is a lot of dresses and a lot of floral and lot of festival-inspired, very feminine looks," said Dan Hess, chief analyst at research firm Merchant Forecast.   Continued...

People carrying umbrellas pass by a Gap store on 5th avenue in midtown Manhattan in New York June 16, 2015. REUTERS/Brendan McDermid