Gap announced Tuesday that it plans to close some GapKids, babyGap, and GapBody stores, consolidating its brands into larger Gap stores in an effort to use real estate more cost-effectively. The plan, CEO Glenn Murphy told a Piper Jaffray conference, will be piloted this year with about 10 locations.
Has the retail industry fallen out of love with the spin-off? Looks that way. Pier One Kids, Talbots Kids and Mens, and Bombay Kids are now history. All were launched in the early 2000s with talk of "expanding customer loyalty to the brand" and all were buried this year with words like "dilution of our core business."
Gap is spending 2008 trying to fix its stumbling revenue model, which includes online shoe shop Piperlime, low-end Old Navy and higher-end Banana Republic stores. It's combining the brands online, so shoppers can pull items from all of them into one transaction. (Over at TheStreet.com, Marek Fuchs is amused at Murphy's description of Gap's 40 million square feet of rented space as an asset. "Shake your average investor or shopper awake at night, and he'll tell you Gap needs to close, shrink and consolidate stores. This was no long-held secret or great revelation. But, it is not so easy to do, despite claims that leases for wasted space that you can't always get out of on your terms are great assets.")
Still, let's assume that it's a renter's market and landlords are willing to negotiate. Who's next to shake off their spin-offs? A few educated guesses:
Pottery Barn Kids -- Struggling Williams Sonoma owns this brand. Like Gap, it's going to have to take a hard look at the acres of selling space it pays for in malls nationwide. Net revenues in the first quarter fell for both Pottery Barn (down 7.9 percent) and Pottery Barn Kids (down 11.1 percent), while the new PBTeen concept rose 24.9 percent, Williams Sonoma President Laura Alber said in a June 4 earnings call. PBTeen is primarily a catalog and online brand, and I'd guess that's where Kids will end up, but I'll bet we see kids' room settings in Pottery Barn stores real soon now.What's your best guess? Trend this column's comps higher by hitting the comment button below.
Ann Taylor -- Find me a woman who can explain the difference between Ann Taylor and Ann Taylor LOFT beyond "Ann Taylor is more expensive." Both sell sharp-looking career and leisure wear for middle-class, 35+ professional women. The company is well-managed, well-merchandised, and no fools. CEO Kay Krill said on a May 22 earnings call that LOFT is the company's growth engine, with more stores, more openings, better comps, and an all-new management team. Earlier this year, Ann Taylor Inc. announced a widespread restructuring, closing 117 stores (both AT and LOFT); it first delayed and then killed an unspecified new concept, although it's going ahead with LOFT Outlet stores to join its Ann Taylor Factory units in outlet malls. Given its core shopper's need to do less with more, watch for Ann Taylor to get more LOFTy in the coming years.
Image: Gap store on Michigan Avenue, Chicago, by Payton Chung via Flickr, CC 2.2