Tag Archives: shifting

Out With the Old: Gap Closing 200 Shops, Shifting Focus to Old Navy, Athleta Brands

Old Navy Posts Rising Income Even as Sales Fall at Gap and Banana Republic Stores

Apparel mainstay Gap Inc. (NYSE: GPS) is moving its focus from its earliest and traditionally most successful brand names to its newest and fastest growing brand names in Athleta and Old Navy.

Space executives announced at a financier conference today that both brands have “significant runway in front of them” after increasing sales at Old Navy balanced out declining sales at its Gap and Banana Republic stores.

The business anticipates Old Navy to go beyond $10 billion and Athleta to exceed $1 billion in net sales in the next couple of years, mainly owned by growth in online and mobile channels and a modest U.S. shop expansion.

The choice marks a major shift far from its flagship Space and Banana Republic brand names, where sales have actually stagnated, leaving the retailer burdened an aging fleet of stores exposed to older, struggling shopping center real estate.

Due to the fact that of that, the company will be shifting its focus to where consumers are going shopping, simultaneously increasing its presence in its more lucrative worth and online channels, the company stated this week at the Goldman Sachs 24th Annual International Selling Conference.

“Over the past two years, we’ve made considerable development evolving how we operate – starting with getting fantastic item into the hands of our consumers, more consistently and faster than ever before,” said Art Peck, president and CEO of San Francisco-based Space Inc. “With much of this foundation in location, we’re now moving our focus to growth. We will utilize our renowned brands and significant scale to deliver growth by shifting to where our customers are shopping – online, value and active.”

Those new strategies include a major expansion of its popular Athleta Lady line concentrating on the kids’s athleisure segment, even as its main competitor in the sector, Lululemon, previously this year announced it would be closing all its standalone Ivivva shops by the end of the third quarter.

Over the next 3 years, Gap Inc. anticipates to include about 70 net new stores, with the addition of about 270 Old Navy, Athleta and outlet and factory stores throughout its portfolio. That expansion will be balanced out by closing about 200 of its Space and Banana Republic places.

Through the very first half of this year, Gap Inc. has actually closed 13 Space stores while opening only three. It has actually closed 8 Banana Republic stores while opening three. It has closed only 5 Old Navy shops while opening 13.

Earlier last month, at its quarterly earnings teleconference, Peck hinted that the company was going to strongly lower Gap and Banana Republic’s direct exposure at struggling shopping centers.

“We’re constantly looking at the routing edge of our fleet and the leading edge of our fleet and comprehending what the distinctions are in performance and truly trying to determine locations where we simply should not be at completion of the day and honestly, determine locations where possibly the consumer has actually moved on and we could reposition the shop too,” Peck said.

Space anticipates to lower costs by about $500 million over the next 3 years by leveraging its size and scale, cross-brand synergies and simplifying operations. The company plans to reinvest a portion of the associated savings in its growth initiatives.

Space and Banana Republic very same shop sales have been succumbing to the past couple of years. Gap compensation sales were down 2% in the very first six months of this year, down 3% in the exact same period last year, and down 8% in 2015. Banana Republic sales were down 5%, 10% and 6% in the very same period.

Old Navy sales however, have rebounded comfortably this year, up 6% in 2017 after a 3% decrease in the first half of 2016. This year’s outcomes make Old Navy one of the fastest growing apparel brands in the U.S. The company attributes the turn-around to its “commitment categories,” gowns, pants, knit tops and shorts.

In addition, the company has actually built a rewarding online and mobile service with double-digit sales growth. Space’s online store sites are built on an exclusive e-commerce platform that supports cross-brand shopping, omni-channel services and an approaching buy online, pick-up in store service, in addition to a brand-new ‘personalization engine’ powered by customer information.

The seller operates about 3,200 company-owned stores around the world with about 450 franchise stores, and e-commerce websites.

ULI/PwC Study: More Investors Shifting Focus to '' 18-Hour ' Cities

Financiers Progressively Bullish on Austin, Charlotte, Nashville; Decreasing Belief for Houston, DC, Chicago in Annual Financial investment Outlook Survey for U.S. Metros

U.S. and worldwide property financiers checked by PwC and the Urban Land Institute (ULI) are significantly bullish on secondary markets such as Nashville, Charlotte and Austin, which edged out ongoing gateway cities such as San Francisco, Los Angeles and New york city City to record 8 of the top 10 rankings for investor outlook in the latest PwC/ULI-authored Emerging Trends In Property 2016 report.

The conclusions mirror growing self-confidence in the investment capacity of these so-called “18-hour cities,” which likewise include Dallas/Fort Worth, Charlotte, Seattle, Atlanta, Denver and Portland. “We are finding a tangible desire to place a rising share of financial investment capital in markets outside the 24-hour entrance cities,” kept in mind Mitch Roschelle, partner with U.S. realty advisory practice leader with PwC.

One survey participant, a financier at a big global institution, expressed surprise at the number of secondary markets that have actually become “suddenly hip” among the institutional crowd, including Denver, San Diego and San Antonio.

Investors have actually been moving gradually to increase their risk tolerance in these markets as the recovery in U.S. economy and realty markets remains to grow, strengthening absorption and tenancy in virtually all markets. It doesn’t hurt that these second-tier markets have actually experienced more moderate compression of cap rates and enhancing yields relative to the entrance markets where investors have actually paid a premium for prize properties and bid up the prices of even less-quality possessions, according to the report.

ULI and PwC presented their joint-report at a conference held this year in San Francisco, where the super-heated property market has raised concerns about affordability and the prospective impact of a downturn in the technology sector on industrial home.

A separate ULI report launched today suggests that the San Francisco Bay Area is at danger of losing millennials to less expensive housing markets. About three-quarters of millennials checked for the report stated they were considering leaving the region within the next five years.

One-third of the respondents from the South Bay area in the Silicon Valley, which has the largest number of millennials, state they are not pleased with their real estate alternatives.

Amongst the report’s other findings:

With office-using tasks making up 39 % of the work gain, office absorption, occupancy and rent development has been brisk in both CBD and suburban workplace markets, with more of the very same expected in the coming year.

With prices currently near record levels in numerous main markets, financiers will direct more capital into the increasing secondary areas, along with restaurant/retail sale leaseback opportunities, and alternative assets such as cell tower, outside advertising and even possibly energy and facilities REITs. Investors will certainly likewise take a closer take a look at redevelopment and other value-add opportunities, including conversion of outmoded industrial centers to “last-mile” distribution centers serving e-commerce, or trendy workplaces. Institutional investor interest will certainly rise in niche property types that are benefiting from altering demographics and innovation trends, such as medical workplace, data centers and senior housing.

Trends compeling middle-market CRE brokerages to grow through consolidation or end up being niche professionals or regional/boutique firms will significantly impact designers, fund supervisors and equity companies. Smaller designers are significantly relying on neighborhood bank loan providers for advancement capital, as big lenders are now more cautious due to federal governing examination.

One Chicago developer that had long worked as an independent on high-end metropolitan construction tasks reported that he just recently moved under the umbrella of a large firm with cross-border companies, noting that “the contractors and owners of building now are completely various” and little builders aren’t equipped to stand up to market down cycles. The cost of pursuing advancement projects, which may take 18 months or more to begin, can cost a home builder countless dollars, he lamented.