Justin Lowe considers himself among the growing number of "Banana Republicoholics."
The 27-year-old New Yorker shops at the clothing and home furnishings chain at least once a month, recently adding a scarf and boxer shorts to his vast Banana Republic collection.
"The stuff is good quality, sophisticated, but not too daring," Lowe said.
Lowe and other stylish, urban professionals have helped Banana Republic become one of the country's hottest retailers. This last year was pivotal to the Gap Inc.-owned company, considered the more polished sister to the Gap and Old Navy chains, but a business that unlike its siblings has struggled in past years to come into its own.
Banana Republic introduced television ad campaigns for the first time in its 20-year history. It brought back a redesigned catalog after a nine-year hiatus that some believe raised the bar for mail-order design. Dozens of new stores opened across the country, and the San Francisco-based retailer added more luxurious merchandise to its mix.
"Banana Republic's performance has improved quite a bit, especially in the past six months, and marketing has been a big factor," said retail analyst Rick Snyder of Morgan Keegan & Co. in Memphis. "I recently walked into a Banana Republic and I was blown away by the presentation and merchandise. I think it finally got the right formula."
Banana Republic's prospects this Christmas appear particularly cheery. The 281-store chain invested heavily in suede and cashmere clothing, two fabrics that analysts say are flying off shelves this holiday shopping season.
Richard Baum, an analyst at Goldman Sachs, estimates Banana Republic will generate $1.2 billion in sales this year, up from $900 million in 1997. Same-store sales will rise 11% this year, Baum said.
During the third quarter, Banana Republic's same-store sales rose roughly 15%, contributing to Gap Inc.'s overall 45% earnings gain.
As New York fashion consultant Harry Bernard puts it: "Banana Republic is going gangbusters."
Even so, Bernard and others believe that Banana Republic has just begun to hit its stride because it targets a huge base of baby boomers and maturing Generation Xers.
However, with the current bombardment of television and print ads and slew of new store openings, the fashion firm runs the risk of oversaturating the brand, which could turn off fashion-conscious consumers, analysts said. The chain also is the most vulnerable in the Gap Inc. family to market downturns.
