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A year and a half ago, Banana Republic was chugging along. It had just posted $2.4 billion in net sales in the US in fiscal 2014, the highest sales numbers recorded in a decade. It wasn’t a meteoric rise by any stretch; Banana had slowly but surely been clawing its way out of the depths of the recession, where, at its lowest point in 2009, it brought in just over $2 billion in sales in the US.
But there was a problem: no one was paying any attention to the brand. It rarely garnered a mention on Gap Inc.’s quarterly earnings calls, where company executives and analysts were more eager to debate the quality of Gap’s perpetual turnaround or praise Old Navy’s staggering rise under the direction of H&M’s former head of sales, Stefan Larsson.
So that’s when, halfway through another boring-but-reliable year of slow sales growth, Banana Republic’s president at the time, Jack Calhoun, announced that Marissa Webb, former J.Crew womenswear extraordinaire and proprietor of her own eponymous line, would be coming on board as Banana Republic’s new creative director. Her design motto, she told Racked after a couple months on the job, was, "Don’t be so dull."
And for the next year, Banana Republic was definitely not dull. Webb’s first collection for Banana hit stores in April 2015 and almost immediately, reliable Banana customers revolted. The brand that they loved, despite — or perhaps because of — its dullness, had changed drastically. Black, grey, and neutral tones dominated the new collections. The skirts got shorter, and the fits got less forgiving.The clothes were simply hard for the average American woman to pull off, and when Gap Inc. reported April sales a month later, Banana Republic’s comparable store sales (a metric that tracks sales from stores that have been open for a year or more) had plummeted by 15%.
Newly installed Gap Inc. CEO Art Peck noted at the time that while those numbers weren’t great, this was Webb’s first go-around and it was bound to get better later in the year — right? But it never did.
When Peck moved into his new role in February 2015, one of the first things he did was replace Calhoun, Banana’s former president, with Andi Owen, a longtime Gap executive who most recently had been managing Gap’s outlet stores. When Owen spoke about Banana’s performance at the company’s annual investor meeting last summer, she immediately acknowledged the mistakes that were currently rolling out on Banana’s sales floor.
"All of these changes have really confused our customer, particularly our women right now," Owen told a room full of analysts, according to a transcript of the meeting. "When she comes into the store, she is having a really hard time outfitting for the occasions that she’s used to shopping for at our stores." The womenswear lacked color and print, the silhouettes of the clothes were oversized and boxy, and if shoppers didn’t want to buy skinny jeans, they were out of luck in the pants department. Owen reiterated that the brand needed to put its bread-and-butter products back in stores: well-tailored pants and sweaters and classic outerwear.
Four months later, Webb was removed from her role as Banana’s creative director and put into a creative advisor position, but her effect on the brand is still playing out in stores. Color came back in the fall in the form of knee-length chartreuse coats and bright orange sweaters — hues that popped in the brand’s photos but were next-to-impossible to pull off in real life. A military green jumpsuit billed as "the season’s hottest new shape" prompted comparisons to the Ghostbusters’ uniform.
"I think they recognize that the product has been off."
At the end of the year, Peck admitted that in his first 10 months on the job, Banana Republic’s performance was his greatest disappointment. Every couple of months, as poor sales data kept rolling in, Peck championed the potential of the new Banana until it was absolutely clear that the new Banana was not a great version of Banana. The whole situation had been "a real disappointment to me, and a bit of a surprise," he candidly told analysts. But again, he pointed ahead, promising that spring and summer 2016 merchandise would surely bring shoppers back to the brand.
"I think they recognize that the product has been off," says Lisa Walters, co-founder of the Retail Eye, a research and consulting firm. "I guess my hesitation is that Art Peck also saw the fall and winter product and thought that that was the product that was going to spark the turnaround. So it does call into question, when he looked at that product and thought that was good product, sort of the oversight of the product direction."
Even if the clothes that are shipping to stores now are moving in a better direction, convincing shoppers to come back to Banana after a wayward year isn’t going to be easy. In January, Banana posted a 17% decline in sales from stores that had been open for over a year. Last month, in February, it was an 11% decline.
"I bought nothing but Banana for almost 10 years," a dismayed shopper posted on the brand’s Facebook page when images of new arrivals for February went live. "I have found *nothing* I like from them for the past 3 seasons." After her comment, four more people replied with their own stories of how Banana had personally let them down over the past year.
"Now it’s up to them to communicate to their customer, ‘Hey, now we’re back, we’re all about you, and we’re sorry.’"
When Gap Inc. released full-year sales results for fiscal 2015 in late February, Banana reported a 9% drop in global net sales in 2015. It was the steepest sales decline the brand had reported in a single year for the past decade.
"I think the style and fashion direction they went in communicated to their consumer that, ‘Hey, maybe this store isn’t really for you anymore,’" says Stacey Widlitz, president of SW Retail Advisors. "Now it’s up to them to communicate to their customer, get them back in the front door and say, ‘Hey, now we’re back, we’re all about you, and we’re sorry.’"
This month, the brand is finally starting to show signs of listening to their customers. Floral prints and bright (but wearable) colors fill the front of the store, and office-appropriate work pants in a variety of fits are back in stock. "I think this current collection is one of our best," a store employee at a Banana Republic in Holyoke, Massachusetts says. "For a while, we didn’t have any color — all black, neutral, grey. We got a lot of, ‘Where’s the color?!’ Now we have florals. We’ll see what summer brings."
But Banana still wants to have at least a small presence in the fashion world. The brand just released a capsule collection in collaboration with Timo Weiland (part of a year-long partnership with the CFDA) and two of the 10 pieces are nearly sold out online. It also released a small "see now, buy now" runway collection, similar to what a number of brands experimented with during New York Fashion Week this past February.
"As an iconic American fashion brand, it's important for Banana Republic to be involved and connected with the Council of Fashion Designers of America," a Gap Inc spokesperson tells Racked in an email. "Our partnership with CFDA allows customers to purchase beautiful, quality pieces from emerging American designers."
At the launch event for the Timo Weiland collection in New York, Michael Anderson, Banana’s senior vice president of design, said that there’s plenty to be gained from doing these small, fashion-forward collaborations. "We want to really understand the industry that we’re in and really start to want to reach out and help [young designers] as well," Anderson tells Racked. "A lot of companies can be very insular. We don’t want to be one of those companies."
The Timo Weiland collection is pricey — $298 for a tree print dress, $248 for a linen blazer — but Anderson pointed out that Banana also sells higher-priced suiting, made with more expensive fabrics. And while the Timo Weiland collection includes pieces at a higher price point then the brand usually sticks with, Anderson believes it still speaks to a certain Banana customer.
"I think what’s really interesting is that our customer really trusts us," he says. "They trust us to edit, they trust us to design, to produce the right kind of product. When we don’t, they let us know, but they trust us."
Banana only rolled out the collection in select stores and online, safe zones where people who recognize Timo Weiland can find the clothes. Most customers — like those in Holyoke — who are just looking for some floral prints, preferably on sale, won’t find the Timo Weiland collection in their stores.
It’s a far cry from Banana’s past collaborations, like the Mad Men-themed collection that it produced for years to coincide with the show. The retro, costume-y dresses rolled out on a massive scale and subsequent sales proved the collaboration was a commercial success. A designer collaboration with UK brand Issa in 2013 featured a copycat of the Issa dress that Kate Middleton wore for her engagement photos, and nothing retailed above $150.
Back in New York, the CFDA collaboration launch event happened just days after Peck, plodding his way through explaining yet another few months of sales losses on Gap Inc.’s most recent earnings call, apologized for Banana’s merchandising mistakes over the past year. "We took Banana to a place where we were trying to lead on fashion and trend and she does not want Banana to be that," he admitted.
"At the end of the day, they describe themselves as a fashion company so they’re trying to get more credibility through some of these initiatives," says Widlitz. "But at the same time, their average consumer, particularly at Banana Republic, is not concerned about what’s on the runway. They want stuff that’s flattering, that fits well, that they can wear to work and look feminine and then potentially transition it into casual wear. That woman in particular, that’s their customer, and they are not following New York Fashion Week for their inspiration."
"I feel like she’s come into Banana and been very disappointed for a long period of time now so it’s going to take time to get her back."
And here is where Banana hopes that the reintroduction of those bread-and-butter products — the tailored pants, the un-boxy sweaters — will ignite the kind of sales that the brand has been missing out on for the past year. "2015 was a rebuilding year for Banana Republic, from product to the brand’s aesthetic standpoint," the company spokesperson explains. "We’ve learned our customers want fashion relevant styles that are on trend but also well-made."
While Peck and his team are optimistic about Banana’s look this year, the brand has to work to rebuild the trust that it lost with its core shoppers. "You have to have consistently better product that the customer then starts to recognize [before] she’s willing to give it a chance again," says Walters. "I feel like she’s come into Banana and been very disappointed for a long period of time now so it’s going to take time to get her back."
With additional reporting by Cameron Wolf.