Gap’s global same-store sales fell five per cent in 2018. Gap has closed hundreds of stores globally over the past five years, yet that hasn’t translated to improved sales. In effect, the closings have pushed the brand further back in the recesses of shoppers’ minds. Shrinking to grow is not seen as a solution when a company has weak brands that can’t drive traffic.
To try and unlock value, Gap has decided to split up into two companies. Old Navy and NewCo — consisting of Gap, Intermix, Athleta, Banana Republic. Old Navy runs more than 1,100 stores in North America (its largest market) and Asia. But it will likely be hard to drum up interest in NewCo in large part because of the ongoing decay of the Gap brand.
After years of product miscues, weak sales and pressured margins at the hands of rising online apparel competition and mall rents, Gap has settled on a strategy to fix what ills the once iconic brand. Gap feels it remains a relevant brand with strong emotional equities. Logo sales were up 11 per cent globally in 2018. Gap sees this as an indication of the equity of the brand.
