You could come up with a laundry list of strategies that Gap (NYSE: GPS) has employed over the years to try to turn around its struggling brands. Now it plans to remodel 50 of its Old Navy stores. Is this exciting news? Sure, if you're into schadenfreude.
Old Navy’s same-store sales have been atrocious for quite some time now. There was a glimmer of dubious improvement last quarter, when Old Navy’s comps dropped “only” 3% -- sure, you could argue that, since last year in the same quarter they had dropped a nauseating 18%.
Gap apparently wants to make sure it’s differentiated from discount rivals such as Target (NYSE: TGT) and Wal-Mart Stores (NYSE: WMT), but some powder and paint probably won’t be enough to jazz up customers. Of course, it’s already quite differentiated and probably not in a great way; you can’t pick up toilet paper and toothpaste there, after all. And check this out. The plan calls for remodeling 50 Old Navy stores this year, but Gap has more than 1,000 Old Navy stores in the U.S. This announcement sounds more interesting than the reality is destined to be.
Over the years, Gap has tried an array of things to bolster business. Recently, it acquired yoga concept Athleta, and, in an odd twist, it’s testing a spin-off accessories concept, despite the fact that many retailers such as Tiffany (NYSE: TIF) and Costco (Nasdaq: COST) are closing down ancillary concepts.
Take a trip down memory lane, and there are all kinds of ideas and initiatives that didn’t improve things overall. There was the now-defunct Forth & Towne concept. There were the “Gap Design Editions” designer white blouses showcased in Vogue. There was even Sarah Jessica Parker, pushing Gap in advertising hot on the heels of the end of the popular show Sex and the City. Oh yeah, I almost forgot Piperlime, which is still around somewhere. Still, Gap has struggled.
Gap does have an impressive stash of cash on its balance sheet, which gives it some freedom to try new things. However, there’s probably not much Gap could say or do to impress me at this point. Its brands have been tarnished by too many years of lackluster merchandise and overexpansion. Meanwhile, other retailers are more fresh and popular with shoppers, such as Aeropostale (NYSE: ARO) and The Buckle (NYSE: BKE). There are far superior retail stocks out there.
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