SAN FRANCISCO — The Old Navy apparel chain's program during Gap Inc.'s company meeting Thursday included a canine and a salute to cargo shorts--but there was some substance behind the annual dog-and-pony show.
Using a mock talk-show format at Gap's annual employee meeting, Old Navy's executives informed their 3,000 Bay Area staff that their chain had exceeded the retailing milestone of $1 billion in annual sales in 1997. It took the Gap chain--the corporate namesake and Old Navy's big sister--18 years to reach that plateau; Old Navy had done it in its fourth year of existence.
Old Navy helped the San Francisco-based Gap--which also operates the Banana Republic chain--register earnings of $533.9 million for the 12-month period ended Jan. 31--a whopping 18% increase over the same period a year ago.
While the Gap chain floundered during the first half of 1997, industry analysts say the Old Navy chain succeeded by appealing to discount shoppers of all ages, particularly teens, with its casual, all-purpose fashions--jeans, khakis, T-shirts, striped knits and casual dresses. A recent consumer survey by the Zandl Group, a New York-based marketing consultant, indicated that Old Navy is a leader in brand recognition among teens.
"Old Navy is meeting the need for decent casual clothing at modest prices with a name that has developed cachet," said Kurt Barnard, a New Jersey-based retail economist. "When it comes to the contemporary fashion demands of teenagers, the name has a status."
Old Navy's fortunes are rising despite the difficulties in specialty apparel retailing. Sales in this sector improved in 1997 but overall the 1990s have been a tough decade. The problem, say analysts, is that there are too many clothing chains chasing consumers who have declining interest in quick-changing fashion and rising interest in value.
And discounters such as Wal-Mart Stores and off-price chains such as Ross Dress for Less and Marshall's have seen sales surge while many mid-priced and upscale specialty chains have reorganized under Chapter 11 bankruptcy court protection, including New Jersey-based Petrie Retail Inc.
"Old Navy entered the market at a time when it's good to be affordable, fashionable and somewhat cool," said Tom Julian, a New York-based apparel trends analyst. "When I visit their stores I see business executives, moms with kids and teenage girls. Old Navy's appeal is very broad."
