With its CEO out, Old Navy needs to go back to basics

Posted by: Helen Walters on February 19, 2008

Dawn Robertson’s is the latest head to roll over at Gap (GPS), today stepping down as president of budget clothing brand, Old Navy, “by mutual decision”, according to the AP.

It’s been a rocky few years for Gap, which doesn’t seem to have adapted very well to the new global brand environment. It’s undergone a series of management reshuffles (Paul Pressler stood down as Gap CEO just over a year ago; Old Navy’s innovation champion Ivy Ross also left in Jan ‘07). But as Gap’s flagship store and offering have continued to less than wow consumers, Old Navy has become even less differentiated in the marketplace. Despite seemingly ubiquitous holiday advertising touting its cheap, cheap wares, same-store sales for Old Navy were down by 5% in its most recent quarter.

Since last July, Gap’s been headed up by Glenn Murphy, previously Chairman and Chief Executive Officer of Shoppers Drug Mart. Now I haven’t met or spoken with Murphy, but this quote from the AP story, that his “first seven months on the job have been marked by cost cutting and better inventory controls that have helped fatten the company’s profits even though sales have continued to erode” rings alarm bells.

And the fact that this year alone, members of the founding/ruling Fisher family have sold some 7.76 million shares (worth around $102 million) also indicates that some insiders aren’t too bullish about the future. Ok, so 8 million or so shares is a drop in the ocean of the 751 million shares available. But cutting costs and trimming fat can only ever be a part of a solution: Long-term innovation requires long-term thinking. And in a fashion retail context that means looking at the design of everything from clothing to stores.

Reader Comments

HJ

March 13, 2008 9:35 PM

Rumors have been flying that Old Navy is kicking the can. Does that mean all we have to choose from is the Gap. I guess I'm out because I will not pay the prices that Gap requires when I can be getting great finds for the entire family at Old Navy. Sorry if they sink!!

Jessica

March 22, 2008 2:37 PM

No Old Navy is not going out of business! I work for and Old Navy story and I keep being asked if we are it's all rumors. We are changing creative directors and CEO's that's it. In fact I feel our brand is improving. In fact for what I've heard we make more money than Gap and Banana Republic so if they were going to get rid of a brand it wouldn't be Old Navy.

Amanda

April 6, 2008 10:22 PM

NO!!!! I also work for Old Navy and whatever idiot came up with this rumor needs to check the facts!! I'm sick of hearing my customers ask me if old navy is closing! People dont even want our credit card now because they say were closing!!! NOOOOOOOOOO WWWEEEEEEEEEEE ARRRRRREEEEEENNNNNTTTTTTT!!!!! Old Navy is amazing and we're here to stay so deal with it!

John Nickoson

April 9, 2008 9:00 PM

Hi I am from the board of directors. Gap have a year to improve sales this year 2008. If this year doesn't improve in any circumstances we believe to shut down the business at anytime soon. Thanks and bye.

James

April 11, 2008 1:42 PM

Hey John,
Why they are pick you for director when you no have grammer skiiling?

H

April 17, 2008 2:09 PM

I don't believe John to be an actual board member...His statement made no sense, most board members have better things to do with their time than write on a message board! Loser!

rsf

April 18, 2008 9:26 AM

Hey john..you moron..learn to spell....Yeah, I remember when I had my first beer !!!

Jamie

May 23, 2008 12:37 AM

There has been many rumors of Old Navy closing. What people don't realize is the amount of profit the store(s) is/are still making, plus the amount of profit they're sitting on. I too work for Old Navy, and no... we're not closing down. As of this month, (May) we're doing better than ever. (Or atleast the store I work for is,) and it's going to take a lot more for this brand to shut down. We sell our quality clothes at a good price, & unless it's defective (which happens once in a while with every brand) our items our durible, and we sell for the entire family. Rest assure to everyone who loves Old Navy and is an Old Navy cardholder....we're not going anywhere.

Dharma

August 14, 2008 9:07 AM

Old Navy is closing 20 under performing stores this year, mainly in locations that have more than one ON. Old Navy is also opening 30 new stores! We are not going out of business but if the economy keeps faltering then who knows what could happen. Out of the GAP brands ON does make an enormous amount of money but it also costs much more to run this brand then GAP or BR. ON needs to get back to basics and focus on the merch that brought our customers in to begin with instead of all the trendy merch they are focusing on now.

Megan

September 9, 2008 11:34 AM

actually I work at Old Navy too and yes, some Old Navy stores are closing. So, there is fact to all these rumors, I believe there is only 25 Old Navy stores (so far) that Gap Inc is closing, this was an update on August 22. Old Navy isn't completely shutting down but like Dharma says if the economy keeps faltering we among other retail stores will be struggling. I also agree with Dharma Old Navy needs to go back to basics and focus more on customer service instead of the Old Navy car. Gap needs to lower their prices too in order for the customer to shop there which in return gets Gap Inc stock to go up.

Taylor

November 17, 2008 9:22 PM

Like many people who have posted already, I do work at Old Navy and have for the past 6 years. I'm fairly certain the rumor began when the company decided to close the majority of the Old Navy Outlet stores--most of which transitioned to Old Navy Retail. I'm sure there are stores out there closing, however the likely reason is for their lacking sales or another store in close proximity. Just because a few stores (of over 1,000) are closing does not mean the company itself is folding in any way.

fred

November 30, 2008 12:13 PM

I believe if Old Navy concentrated on their customer service , they could be successful. Their service is terrible and is reflected by their drop in sales.

TOSHUA

December 28, 2008 6:03 PM

Dear employees of retail stores,

You are usually the last to know that your store is going out of business.

Sorry it's so true, just watch out for the signs.
First they start firing people for stupid reasons.

Teneill

January 4, 2009 12:00 AM

I've been workinng for Old Navy for 4 yrs. and no we are not going out of business!!! And we focus on our customers they just want everything cheap as hell!!! And if we did go out of business it would be because the customers don't want to pay for anything!!

Alex

January 6, 2009 5:44 PM

I too, work for Old Navy, and I've asked my managers if we're closing, and they all said no. I don't think we're going anywhere.

Matt

January 15, 2009 1:07 AM

I haved worked for Old Navy for over a year now, the last 8 months in upper management. I can tell you that my store continues to thrive as do all of the stores in my district. This past Holiday season was one the best in my store's history. We consistently beat all of our comparables from previous years by substantial margins. Not to mention the fact that if Gap Inc were to close Old Navy they would be killing a major source of revenue.

Misty

January 22, 2009 12:18 AM

If old navy isn't going out of business then why can't i get on the web site? It's been like that for weeks.

Ashley

January 31, 2009 3:06 AM

Misty, I haven't had a problem at all with the Old Navy website, in fact, I just got done ordering from there. I heard that the Old Navy employees got a letter from upper management saying that they were not closing, and to ignore the rumors. With this economy things are shaky for all stores, but with Old Navy being the best priced for the whole family out of all the Gap Inc stores, I don't see how they would even consider closing stores. A new one is set to open up in my area within next 6 months, so I guess things are not too bad.

Jessica

January 31, 2009 5:30 AM

Toshua, while you are correct that employees are the last to know, my Old Navy store continues to keep hiring. We've even had a store meeting to discuss the possibility of our store closing, and how it's non existant.

Often before shipment we do things we call moves, preparing for the new clothes coming in. These give the store a sort of empty feeling, and prompt the question of our closing often. Please rest assured, that our brand is not going anywhere. Quality clothing for the whole family, at a reasonable price.

Brian

February 3, 2009 1:46 PM

I work at Old Navy also and if we did go out of business it would be for their own good. They don't focus on sales but rather on pushing Old Navy cards to every customer.

Deni

May 19, 2009 12:07 PM

Well people.......wake up!!!......just a little word of advice.......don't let your guard down when it comes to a company closing. Restructuring is great.......but a lot of times it's the employees who are the last to know when a store or buisness closes.....they walk into work only to find a sign that says closed or someone there to meet you with a pink slip. I have heard about it many times as many of you have too. I work for a company that is financially strong.....but because of the economy...... has decided to shutdown the plant for 8 months with just a skeleton crew to oversee things. We're hoping for conditions to improve over the next year. Never underestimate what could happen............especially with the economy of today.

Mary

June 14, 2009 12:15 PM

Its website is down for good it seems like.
I was able to use the website last week. I went on there today; nothing.

http://oldnavy.com/store-closed/OldNavy/storeClosed/en/index1.html

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