Gap Inc. spent several years as a punching bag for Wall Street, thanks to slipping sales, marketing missteps and an indistinct positioning among some of its core brands. But the company is swinging back.
Its stock hit a 52-week high last month. Net sales for the second quarter rose 8%, while sales for July were up 5%. Global expansion and the rapid creation of strong global marketing teams is fueling growth. Gap Inc. rounded out its trio of global chief marketing officer positions this year, with appointments at Old Navy and Banana Republic. Marketing across its brands is benefiting from increased investment and fresh ideas.
At the company's namesake brand, Global CMO Seth Farbman has taken the brand back to its roots, emphasizing Gap's purpose and values, as well as its founders, Donald and Doris Fisher. Internally, execs live by the mantra "believers in bright" -- a nod to the Fishers' desire to have a "store with a heart." Its latest campaign, dubbed "Back to Blue," is bringing the retailer back to TV advertising for the second time in seven years -- a vote of confidence from its parent company.
According to Kantar Media, Gap brand spent $60 million on measured media in the U.S. last year, up from $26 million in 2011. The last year the brand bought TV, in 2009, it spent $97 million on measured media in the U.S.
"We've gone through so much change in the last two, two-and-a-half years -- structure, offices, people, marketing -- but we've stayed really whole," Mr. Farbman said. "[Employees] were unsure a few years ago what the brand stood for, too."
Same-store sales show the brands are bouncing back: Gap has not posted a negative month in the past year. Old Navy's same-store sales were up 6% in the second quarter, while Banana Republic's were down a marginal 1% for the quarter.
Old Navy, Gap Inc.'s biggest spender on traditional media, is beginning to benefit from new leadership in Stefan Larsson, the company's first global brand president, and Ivan Wicksteed, global CMO. Unlike Gap, Old Navy is moving away from TV advertising as it adjusts its marketing mix with more digital and social media. "We have a unique opportunity to bring our fashion point of view to bear on the marketplace and impact how people dress," said Mr. Wicksteed.
Banana Republic has also rethought marketing under Catherine Sadler, who was appointed global CMO in February. She's been working to create a global brand identity and establish an editorial function within the brand's marketing team. Outside resources, including editors from several major women's magazines, were brought in to help the brand think like a publisher. An editorial calendar was crafted, with execs looking broadly across the months of product plans and determining what stories should be told and when.
"[Editorial] is an ongoing discipline in the organization. It really becomes a muscle, from the very inception of a product to the ultimate marketing of a product, we're all aligned on key stories," Ms. Sadler said. Gap Inc.'s smaller brands -- Athleta, Piperlime and Intermix -- are also growing rapidly. Athleta has gone from just a handful of stores 18 months ago to 50 last month, with plans for another dozen stores in the works. "We were worried the stores would cannibalize the direct business, but it hasn't," said Tess Roering, Athleta's VP-creative marketing.
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