Old Navy Thumbs Nose At Retail Apocalypse, Plans To Almost Double Number Of Stores
The retailer is adding about 75 stores a year to bring it from its current 1,140 locations up to nearly 2,000.
The plans fly in the face of the U.S. retail industry's contraction, but Old Navy President and CEO Sonia Syngal said at an investors' event Thursday that most of the growth will be in underserved small markets. The focus will be away from struggling malls.
"We're an $8B startup," Syngal said, referring to the brand's most recent sales total, considered separately from the Gap. "The sky's the limit."
Syngal said one of the goals of the expansion is to drive sales to $10B. There will also be merchandising changes, with the company planning to grow market share in the plus-size market, which Syngal said is underserved.
"[Old Navy has] grown sales and comp over the last three fiscal years and we see a lot of white space for continued store expansion," Gap President and CEO Art Peck said during the company's most recent earnings call, which was in August.
Gap Inc. is in the process of refashioning itself into two separate entities. Old Navy will be the basis of one of the successor entities, while the other will consist of the Gap brand, Athleta, Banana Republic, Intermix and Hill City.
"Old Navy’s market share position holds strong at 3.1%," Peck said. "It remains the No. 2 largest apparel brand and the No. 9 largest retailer."
Even so, the Old Navy brand had a weaker than expected second quarter, with comparable store sales down 5% from the same quarter last year.
"We remain concerned at [Old Navy's] ability to right their ship in time ahead of holiday," Wells Fargo Senior Analyst Ike Boruchow told Retail Dive.
U.S. retailers have already announced more than 8,200 store closings, greatly exceeding last year's total of 5,589, and only 3,446 store openings, according to Coresight Research.