Gap’s stock is tanking after reporting that same-store sales dropped 7% in February, when analysts expected a 1.1% rise.
Of the company’s three brands, investors should be most concerned about Banana Republic, where sales dropped 7% in February, according to Brian Sozzi, chief equities strategist at Belus Capital Advisors.
Banana Republic was once the office standard for style, but it’s offerings have grown stale, Sozzi said.
He gave these four reasons for why the brand is failing:
- The merchandise assortment has consistently lacked colour in men’s and women’s.
- There is not enough pizazz in the merchandise assortment for men’s and women’s.
- The brand lacks lifestyle activewear, which is one of the fastest-growing apparel markets right now.
- Department stores, like Nordstrom, have improved their wear-to-work fashions and price points.
Sozzi also noted that Banana Republic was not a top performing brand for Gap in sales during any month in 2013.
The brand’s sales were negative for seven out of the 12 months in 2013, and four of those months came at the end of the year during the crucial holiday period.
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