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article imageRapidly changing women's fashions challenging for Banana Republic

By Nathan Salant     Nov 11, 2015 in Business
San Francisco - Is Banana Republic running out of time?
That's the view of many industry analysts interviewed by Cable News Network (CNN), who say the once-iconic clothier has fallen out-of-step with rapidly changing women's fashions.
Analysts say Banana Republic sales have been falling steadily in the face of more-nimble brands H&M, Zara and Forever 21.
Company officials say Banana Republic has merely been facing "product acceptance challenges" with female customers but, as Paula Rosenblum of RSR Research jokingly told CNN, "that means people hate their stuff."
"They're not nimble enough for the competitive landscape in apparel right now," said Laura Champine, a Cantor Fitzgerald retail analyst, who estimated that mature retail brands like Banana Republic typically design and order expensive clothing lines as long as a year in advance.
That's just not fast enough in today's competitive marketplace, and those early bets still have to pay off.
"Faster competitors like Zara and H&M are beating them at their own game," Champine said.
Even if the faster fashion retailers may not deliver the highest quality materials, they still can beat mature brands on timeliness and price.
"If I'm a Millennial, why the heck would I spend $165 for a dress at Banana Republic when I could get something for $40 at H&M or Forever 21?" Rosenblum asks.
"Fast fashion is pummeling the industry," she said.
But falling sales at Banana Republic also affect the bottom line at parent company Gap Inc., which is reporting a 5% decline, CNN said.
Sales at sister company Old Navy rose 2%.
At least Old Navy has an excuse; CEO Stefan Larsson unexpectedly left in September to work at competitor Ralph Lauren, CNN said.
That's why Gap stores are warning lower-than-expected third-quarter earnings -- they have been offering big discounts in October in an effort to hold onto its customer base.
But Banana Republic appears to be well-insulated against any threats to its existence.
It still brought in nearly $3 billion in sales last year, about 20 percent of Gap Inc.'s income.
"There is lots of room for this brand to decline; it's way too early to call the death of Banana Republic," Champine said.
"It can have a slow bleed, which is frankly what we've seen for many brands the Gap owns," Champine said.
Rosenblum said Banana Republic needed to reach its bottom, find a turnaround expert and adapt to the new world of female fashion, CNN said.
More about Banana Republic, Gap, women's, Clothing, Fashion
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