Gap CEO sees smooth sailing ahead for Old Navy
While many others are reducing store counts — including sister chains Banana Republic and Gap — Old Navy is moving full steam ahead opening new locations and remodeling others.
In an interview with CNBC, Gap Inc. CEO Art Peck confirmed previously announced plans for Old Navy to open 60 new stores in the U.S. this year, double its new units in 2017.
The move follows a year during which the discount family apparel chain’s sales grew six percent to surpass $7.2 billion. On the company’s fourth quarter earnings call, Mr. Peck said Old Navy’s same-store sales grew across all categories and the chain achieved “strong top line and bottom line growth” in its stores and online.
Mr. Peck told CNBC that the company is focusing on opening new stores in “open-air centers and street-level retail” while moving away from malls. Remodeled stores are receiving more modern fixtures and upgrades to fitting rooms, checkouts and bathrooms.
Gap Inc. is also looking to upgrade its technology through its mobile app including allowing customers to check on inventory in stores, read customer reviews and keep track of loyalty points. Management is also running a pilot to test click and collect service in a small number of stores.
Old Navy’s emphasis on low prices has helped the retailer achieve sales gains with its own brand merchandise while other discounters such as T.J. Maxx flourish selling off-price name brand apparel.
When asked about competition from Amazon.com, Mr. Peck told CNBC, “I would characterize [Amazon] as excellent and hyper-efficient for buying, but it’s not a great discovery platform. … And a big part of fashion apparel is discovery.”
- Gap Q4 2017 Results (Earnings Call Transcript) – Seeking Alpha
- Old Navy to open 60 stores this year, driving Gap’s growth – CNBC
- Gap Inc. leans more heavily on Old Navy and Athleta – RetailWire
DISCUSSION QUESTIONS: What do you see as the keys to Old Navy’s continuing strong performance? Will Old Navy’s advantage as a “discovery platform” enable it to hold off competition from Amazon?