Consumers’ budgetary concerns appear to be influencing the sportswear brands with which they are most familiar.
Take Old Navy, the shining star of the Gap Inc. empire. At a recent annual shareholders’ meeting, Gap Inc. president and chief executive officer Paul Pressler, in saying that profits and sales are improving at the group, noted that Old Navy is leading the revenue gains.
Old Navy is rooted in affordable, colorful fashions for men, women and children: Think T-shirts and shorts priced around $10, kitschy advertising and bargain-priced “Item-of-the-Week” promotions. Stores feature aisle after aisle of affordable fashions and gifts, and sales associates commonly offer shoppers a large bag to tote around items while shopping.
And for the three months ended May 3, Gap, the nation’s largest specialty apparel chain, saw income rise 452 percent to $202.5 million, at the high end of its expectations. The firm reported income of $36.7 million in the corresponding period last year.
Gap’s current goals include getting the product right after a shaky down period, Pressler noted, and he cited positive consumer response to its ongoing advertising campaign, which highlights a return to classic styles and a move away from trendy, youth-oriented apparel.
Old Navy, he said, is pursuing a more targeted brand positioning. Pressler said the value and youth-oriented brand’s turnaround is the farthest along in the company. April sales saw 20 percent comp gains, against a 27 percent decline last year. Old Navy’s first summer TV ad campaign features campy “Love Boat”-themed spots.
Dockers, a division of Levi Strauss & Co., is known for its khakis, but has upped the fashion quotient, adding boot-cut pants, novelty fabrics, and an assortment of novelty tops. The company has also added licensed categories, most recently, cold weather accessories, and its advertising campaign reflects a more lifestyle-oriented approach to dressing.
Even though the CK Calvin Klein women’s business is currently up for grabs, with a better-priced line expected to hit retail stores by the second half of 2004, it is clear the brand has far-reaching appeal for consumers, considering Calvin Klein snagged the number-four spot.Despite declines in its men’s and women’s wholesale divisions and its retail operation, Tommy Hilfiger remains a memorable brand in the eyes of consumers, who seem unfazed by the company’s financial woes.
The company reported a net loss of $113.8 million recently, for the fourth quarter ended March 31. The loss in the most recent year resulted from a non-cash charge of $150.6 million for goodwill impairment relating mostly to the firm’s U.S. wholesale component. However, the loss was in part offset by a $9.3 million pre-tax reversal of a previous charge for specialty store closure expenses, which came in below expectations.
Meanwhile, Tommy’s women’s wear business in Europe grew significantly in fiscal 2003 and contributed to about 25 percent of the firm’s European revenue for the year. The company said that gains in the European women’s business partially offset declines in the U.S. and that women’s wear continues to represent an opportunity for the firm in the European market.
With women’s items like classic poplin shirts and five-pocket twill pants retailing for around $30, it’s not surprising that L.L. Bean scores high with consumers — particularly those with an outdoorsy bent.
L.L. Bean is reportedly interested in acquiring Eddie Bauer, which occupies the number-seven slot, and it has hired consultants to help it review Eddie Bauer’s assets. Eddie Bauer corporate parent The Spiegel Group is operating under Chapter 11 bankruptcy court protection.
Lands’ End, which occupies the number-nine slot, designs its own products, and corporate parent Sears, Roebuck and Co. buys the line as if Lands’ End were a wholesaler.
“Lands’ End is very important, but it’s more like the icing on the cake,” said Kathryn Bufano, Sears executive vice president of softlines. “When you think about all of the initiatives that are taking place, it’s mind-boggling.”
Narrowly landing on the sportswear top 10 is apparel powerhouse Liz Claiborne. The brand’s world extends into several categories beyond sportswear, including dresses, intimates, children’s wear, eyewear, outerwear, sleepwear and swimwear. “Liz Claiborne is a critical factor in driving this company,” said Paul Charron, chairman and chief executive. “The brand remains extraordinarily healthy, especially in terms of consumer awareness.”
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