Gap is still waiting for a turnaround
When Art Peck came on as the CEO of Gap Inc., the plan called for him to breath new life into the company with the tech-savvy approach displayed in his previous role as the president of the company’s Growth, Innovation and Digital division.
An expansive feature article in Fast Company earlier this year discussed Mr. Peck’s forward-looking, mobile-centric omnichannel strategy, dubbed Retail 3.0, for which he had been testing digital walls and theorizing about clothing vending machines. Mr. Peck also expressed concerns with bringing Gap’s clothing back to being high quality and on-trend. But the company’s Q1 earnings, released earlier this week, indicate that his plan for a turnaround have yet to yield results.
Bloomberg reported that for the first time in nearly eight years, Gap failed to beat analysts’ estimates. This is not good news for a company that, according to data the news organization had compiled, had previously beat estimates 31 times in a row. Total same-store sales for Gap also dropped by four percent, following a 10 percent drop in its same-store numbers last quarter.
It wasn’t all bad news, however, as Gap-owned Old Navy experienced a three percent rise in same-store sales. Old Navy’s success is attributed to its transition to a more fashionable, yet still affordable, selection. Kudos have gone to Stefan Larsson, who was named global president of Old Navy in October of 2012. Previously, Mr. Larsson presided over H&M’s U.S. expansion.
"It’s a thing of beauty when Old Navy is firing on all cylinders and has now for several seasons running," Mr. Peck said on a conference call, as reported by Bloomberg. "On the flip side, I continue to be disappointed but not surprised by Gap’s performance. I can promise you that the team is all over it."
A significant area of concern is Gap’s sluggishness executing on new ideas. Mr. Peck told Fast Company that it currently takes 10 months for stores to get new concepts onto their shelves, a timeframe he intends to cut down drastically.
- Inside Gap’s Plan To Get Back In Your Drawers – Fast Company
- Gap Fails to Beat Profit Estimates For The First Time in 8 Years – Bloomberg
- Parent Gap Inc. benefits as Old Navy gets stylish – Marketplace
- Old Navy Thrives After a Style-Conscious Rebirth – The New York Times (tiered sub.)
What should Art Peck’s course of action be to revitalize the Gap brand in light of the company’s recent performance? Does Old Navy’s success provide a blueprint for Gap Inc.’s other businesses?