Every year retailers battle it out to have the best sales growth and customer satisfaction. In addition, large retailers endlessly strive to fill a market niche that is otherwise not currently being filled. As a result, sub-brands are created to spark the public's interest and ultimately, generate new business and company growth. Chico's FAS (NYSE:CHS), Gap (NYSE:GPS), and Ann (UNKNOWN:ANN.DL) are following this strategy with each managing its own set of sub-brands to fill a distinct niche within the marketplace. This begs the question: Which of these three retailers' sub-brands specializing in women's designer fashion has the highest growth potential – White House | Black Market, Banana Republic, or Ann Taylor LOFT?
How well do you know these companies and their sub-brands?
The history of all three companies dates back as far as thirty to nearly sixty years. Chico's, for instance, was founded in 1983 as a small boutique in Sanibel, Florida. Its four brands include: Chico's, White House | Black Market, Soma Intimates, and Boston Proper with over 600 Chico's and 100 outlets, 402 White House | Black Market boutiques and 45 outlets, and 206 Soma Intimates boutiques and 16 outlets. Each brand also manages its own monthly catalog and website for easy online shopping with White House | Black Market being the most successful. White House | Black Market was actually founded in 1997 after first opening as The White House in 1985 and then, Black Market opened in 1995 until 1997 when the company merged the two brands into one.
Gap, on the other hand, was founded in 1969 as a small boutique. Its brands include: GAP, Banana Repyblic, Old Navy, Piperlime, Athleta, and INTERMIX. Today, Gap operates 3,444 stores globally, including 1,367 The Gap's, 645 Banana Republics, 1,013 Old Navy's, and 419 split among the smaller three brands. Banana Republic is Gap's only upscale, luxury clothing store catering to both men's and women's designer fashions. The company Ann actually has been around the longest out of the three retailers – 59 years.
Unlike the other two companies, Ann consists of only two brands: Ann Taylor and Ann Taylor LOFT with outlet stores for each. The brand Ann Taylor caters to the working professionals and has better prices while LOFT provides a better value with versatile looks for both young and older adults. Women managing multiple roles – work, home, and play – choose to shop at LOFT. The company operates 984 stores, including 275 Ann Taylors and 525 Ann Taylor LOFTs.
What's the breakdown?
For the latest quarter ending Aug. 2, Ann's LOFT brand saw sales growth of 2.5% while its Ann Taylor stores saw sales growth of 3.1%. Clearly LOFT isn't the best sub-brand within the women's fashion retailer space. Gap brand Banana Republic did even worse, with negative sales growth in its most recent quarter of 1% compared to a 6% increase in sales companywide. Gap may need to reconsider the brand's target market or even pricing strategy in order to strengthen sales and future business.
On the other hand, Chico's FASbrand White House | Black Market is doing quite well with its sales during its most recently completed quarter ended August 3, experiencing a growth rate of 5.46% over the same period last year and outpacing Chico's branded stores which saw a 0% growth rate. Clearly Chico's is on a roll with its sub-brand White House | Black Market which caters to women balancing both work and social lives.
|FY ending early||2013||2012||2011||2013||2012||2011|
|Ann Taylor LOFT||608||574||538||$1.43||$1.305||$1.117
Based on the last three fiscal years's total store count and revenue sales shown in the chart above, one can infer that White House | Black Market is growing and producing at a faster pace than the others with Banana Republic falling short. At this rate, White House | Black Market will trump Banana Republic's store count and revenue sales.
And the winner is...
As Foolish investors can see from the recent sales performances of these three ubiquitous brands, White House | Black Market has the highest growth potential in the years to come. Although all three sub-brands focus on high-quality, women's fashion designs along with similar pricing, White House | Black Market has more of a competitive edge over the others and fills that niche within the marketplace. Competitive product offerings and a smaller store footprint than its peers, which leaves more room for future growth, make it hard to imagine White House | Black Market doing anything but enjoying even more success as more and more women discover this niche fashion retailer.
Fool contributor Natalie O'Reilly has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.