NEW YORK — Gap Inc. this week disclosed it will target women aged 35 and older with a new concept, but its president and chief executive Paul Pressler on Wednesday acknowledged it could be up to two years before there is any significant rollout...
NEW YORK — Gap Inc. this week disclosed it will target women aged 35 and older with a new concept, but its president and chief executive Paul Pressler on Wednesday acknowledged it could be up to two years before there is any significant rollout of the format.
While Gap disclosed few details about the new division, up to 10 stores are seen opening in fall 2005 in two regions of the country and they will undergo at least a couple of seasons of testing before a decision on a more aggressive rollout is made, said Pressler.
The concept’s development comes as there are growing questions over the long-term growth prospects of Gap Inc.’s existing brands — Gap, Old Navy and Banana Republic — and sales growth has slowed recently at the group, especially at Gap brand. But Pressler believes the business is in good enough shape to introduce another concept.
“The past two years have been spent restoring the health and credibility of our management team and fixing our balance sheet,” said Pressler in an interview Wednesday. “I believe we have earned that trust with shareholders and now we are beginning to explore the growth potential for this company.” He added, “We are exploring lots of ideas on how to grow.”
He also said he prefers a “general manager,” rather than a merchant or product specialist, to succeed Gary Muto, president of Gap brand, who has been reassigned to launch the new, yet-to-be-named division. In the second quarter ended July 31, sales at Gap brand remained flat at $1.2 billion, while Old Navy sales rose 6.7 percent to $1.6 billion and Banana Republic sales rose 6.2 percent to $528 million.
Gap Inc. saw earnings slide 7.2 percent to $194 million, and overall sales inch up 1 percent to $3.72 billion. The international division continued to show difficulty, falling 4.9 percent to $445 million.
For August, a tough month for many retailers, Gap reported flat sales at Gap brand and Banana Republic, and down 1 percent at Old Navy.
While there are perceptions that Gap’s existing operations have maxed out, and investor demands (in particular from Gap’s biggest shareholder, the Fisher family) are mounting for developing expansion strategies and lifting the stock price, Pressler said, “We are not under significant pressure to grow. We have huge growth opportunities in our existing businesses, and we are planning and considering other concepts.”
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"