Gap Stands Behind Flailing Banana Republic

(MoneyWatch) 
Gap Inc.'s Banana Republic chain, once a go-to place for young professionals, is a victim of hard times nowadays. But Gap executives said at their recent investor conference that they are standing by the brand and rolling out new initiatives to get it rolling again.

While sales at none of the Gap chains are hitting it out of the park this year, Banana is consistently performing as the worst of the three, which also include the company's namesake chain and Old Navy. Same-store sales at Banana are averaging a 13 percent drop so far this year. Meanwhile, Gap is down 10 percent, and Old Navy is turning in a surprisingly good story as of late, only dipping one percent so far in 2009.

"Banana Republic is a global and accessible luxury lifestyle brand," said Jack Calhoun, president of the chain, during investor day. "It's a brand that deserves top-line growth to come back."

When one analyst commented that she used to shop at the store until its collection seemed more suitable for her 65-year-old mother and wanted to know what went wrong, Calhoun commented that management was too focused on selling work apparel, as opposed weekend and nightlife clothing. "We got too serious," he said.

So now the chain will start selling more fashion-forward items with a better color assortment. Calhoun also pointed to the hiring earlier this year of Julie Rosen, who is heading up the chain's merchandising, as a reason to have hope for the future.

Another update to the 544-unit chain is a new prototype store, the first of which opened in September in Las Vegas. The store features a circular plaza surrounded by accessories, personal stylists and a kiosk to buy items online, according to the Las Vegas Style Examiner. Another new prototype just opened in Scottsdale, Ariz.; and one will follow next month in the SoHo section of Manhattan.

It seems like things could be headed in the right direction for Banana Republic if Gap can find a way to attract a price-conscious consumer as well. But for a better story in the meantime, one might look to Old Navy, which sported a 13 percent same-store sales increase last month and is rolling out a new design in 50 of its stores by the end of the year.