It seems that Banana Republic is a contracting chain, as its parent company, Gap Inc., has announced it will be shuttering all U.K. locations of the struggling retail brand.
It's not a massive contraction — there are only eight BR stores in the U.K. — and the move fits with Gap's general strategy of closing underperforming stores overseas. France and Italy will each keep one store apiece. All in, 75 overseas Old Navy and Banana Republic stores are heading for the block, including 53 Old Navy stores in Japan.
The brand’s European unit has been in decline of late. Second-quarter net sales, reported in August, declined to $17 million from $20 million in the same period last year. Banana Republic Global reported a 9 percent same-store sales decline in September. That is slightly better than a 10 percent decline last September and narrowly edged expectations for a 9.1 percent.
But it isn't great news, and BR has had trouble getting the love from the tastemakers of the world, who note that BR's clothing just isn't passing the fit and feel test.
"The main issue is that Banana Republic’s proportion isn’t working,” Neil Saunders, managing director of retail research agency and consulting firm Columino, told Business of Fashion. “This is true globally but is especially acute in the U.K. where the business is small and doesn’t benefit from the volume that it does within the U.S. The assortment [of clothes] is at the heart of Banana’s issues and symbolizes a brand that has lost its way. Customers are confused and, of course, increasingly unwilling to pay the premium that Banana once commanded. As a consequence, the brand is falling into exactly the same trap as Gap as it resorts to discounting and deals to shift merchandise.”
Still, there are some positive takes.
Guggenheim’s Howard Tubin noted in an August blog post that there’s evidence Banana Republic is improving:
“Banana Republic is delivering more commercially friendly patterns and key item offerings.”