Gap CEO draws ‘line in the sand’
Gap Inc. CEO Art Peck is refocusing the 3,000-store company on the areas with the biggest potential for driving growth — and they do not include its oldest divisions.
“We’re certainly not giving up on Gap or Banana [Republic], but we’re acknowledging the world continues to change,” Peck said in an interview with Bloomberg. “And those are the two most mature brands in the portfolio.”
Going forward, Peck is emphasizing Gap's newer brands, Old Navy and Athleta. He is not giving up on the company's namesake division as much as he is pruning it.
“I want fewer, better Gap stores,” he said in the report.
Old Navy contributes about three-quarters of the company’s profit, compared with Gap’s 7%, according to Jefferies LLC analyst Randal Konik.
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Summer sales slump
Consumers were cautious in their spending during the summer months.
Retail sales in August decreased by 0.2% from July on a seasonally adjusted basis, according to the National Retail Federation. (The NRF numbers exclude automobiles, gasoline stations and restaurants. Also, the Commerce Department said data for July was revised to show sales increasing 0.3% instead of the previously reported 0.6% jump.
Among the biggest surprises of the data for August was that the biggest decrease was in online and non-store sales, which fell 1.1%. Sales at apparel stores fell 1%.
“Retail sales for August were truly a mixed bag, with monthly gains in July reversed in August,” NRF chief economist Jack Kleinhenz said. “The bottom line is that consumer spending is uneven but remains resilient and the key contributor to U.S. economic growth. While it is too early to assess the impact Hurricanes Harvey and Irma have had on the economy and retail sales, there’s no doubt that they will impact consumer spending – particularly in certain sectors – as Florida and Texas work to rebuild.”
Year-over-year growth was up 3.4% on a three-month moving average. Specifics from August sales include:
• Online and other non-store sales decreased 1.1% seasonally adjusted from July but increased 8% unadjusted year-over-year.
• Clothing and accessories stores decreased 1% seasonally adjusted from July but increased 1.5% unadjusted year-over-year.
• General merchandise stores increased 0.2% seasonally adjusted over July and increased 3.1% unadjusted year-over-year.
• Electronics and appliances stores decreased 0.7% seasonally adjusted from July and decreased 3.3% unadjusted year-over-year.
• Furniture and home furnishings stores increased 0.4% seasonally adjusted over July and increased 5.9% unadjusted year-over-year.
• Building materials and supplies stores decreased 0.5% from July but increased 8.2% unadjusted year-over-year.
• Sporting goods stores decreased 0.1% seasonally adjusted from July and decreased 1.7% unadjusted year-over-year.
• Health and personal care stores increased 0.1% over July and increased 0.3% unadjusted year-over-year.
Aerosoles files Chapter 11; to focus online, wholesale
Women’s footwear brand Aerosoles has filed for Chapter 11 bankruptcy protection as it looks to shutter nearly all of its U.S. stores.
The company has about 80 stores in the United States, and also sells its shoes through other retailers. It has begun store closing sales and is seeking approval from the Bankruptcy Court to proceed with the sales. Aerosoles said it plans to maintain four flagships, in New York and New Jersey, and will also enhance its e-commerce, wholesale and international businesses.
“By improving our financial structure and right-sizing our retail footprint, we will be able to refocus our business efforts on the execution of our turnaround strategy, said Denise Incandela, who was appointed Aerosoles’ interim CEO in June. “We will continue to create product that leads the market in comfort and fashion, grow our ecommerce, wholesale and international businesses, and promote innovative new marketing campaigns that will drive our business forward.”
The company listed assets of $10 million to $50 million and liabilities of $100 million to $500 million, according to its bankruptcy court filing. It said it expects to complete the restructuring within approximately four months.
“This process will allow us to emerge as a stronger brand and company and reinforces our commitment to providing a superior shopping experience in stores and online,” Incandela said.