Old Navy is spearheading Gap Inc.’s growth as its namesake brand struggles to keep up.
Gap Inc., the parent company of Gap, Banana Republic, Old Navy, and Athleta, saw flat sales in the most recent quarter, reported on November 20. Prior to this quarter, the company saw seven consecutive quarters of positive comparable sales growth.
Old Navy is the most successful of the Gap brands, reporting that comparable sales were up 4% in the third quarter. So far in 2018, Old Navy has opened 24 stores. CEO Art Peck announced in an earnings call in August that Old Navy will be launching a plus-size collection, which was previously only available online and in select stores.
Meanwhile, the Gap brand itself is struggling — comparable sales were down 7% in the third quarter. Gap discounts nearly everything in the store, threatening margins and, ultimately, making shoppers less likely to pay full-price. It also offers a lot of the same styles and quality clothing as Old Navy, but for a higher price.
“We are clearly not satisfied with the performance of Gap brand. We know this iconic brand is important to customers, and we are committed to taking the bold and necessary steps to ensure that it delivers value to shareholders,” Gap Inc. CEO Art Peck said in the company’s earnings release in November.
We shopped at Gap and Old Navy and saw why one store is helping Gap Inc. while the other is hurting it: