Gap Shutters Forth & Towne
Gap Inc. hoped to give baby-boom women extra fashion choices with its retail division Forth & Towne. But after a mere 18 months of business, the San Francisco–based specialty store giant pulled the plug on the new retail concept, which had 19 locations throughout the United States.
Gap said the baby-boom experiment soured after a successful debut, but the company’s board of directors believed the nascent division would not bring a decent return on its investment.
The closing of the baby-boom stores allows the San Francisco–based Gap to concentrate more on its sprawling fleet of 3,100 Gap, Banana Republic and Old Navy stores, said Bob Fisher, Gap Inc.’s chairman of the board and interim president and chief executive. “We made the tough decision to close the brand and focus our efforts on stabilizing the existing businesses,” he said in a statement.
Fisher’s announcement was applauded by Wall Street analysts. But Todd D. Slater, an analyst with Lazard Capital Markets, noted that Gap has a lot of work to do to bring the beleaguered company back to a level of profitability it has not seen in more than one year.
“Forth & Towne will improve the company’s focus. Gap still lacks the best industry talent needed to make its strong core brands competitive,” Slater wrote in a research note dated Feb. 26.
The closing of the Forth & Towne division comes at a time of turbulence and transition for Gap Inc. The specialty retailer’s beleaguered former chief executive Paul Pressler resigned on Jan. 22. Since then, Gap’s board announced several other resignations of top Gap executives, including Gap Brand President Cynthia Harriss, who left the company on Feb. 1, and Gap brand’s head designer, Charlotte Neuville, handed in her resignation on Feb. 8.
The executive musical chairs may also be a gift that keeps on giving to Gap. Former Forth & Towne chief Gary Muto will be free to return to one of Gap’s divisions, according to Slater. In 2004, Pressler transferred Muto from his position as former Gap brand president to the leader of Forth & Towne.
Slater believed that Forth & Towne made a compelling debut, but its products soon showed problems with their style and fit. The analyst also said that the fashion market for baby-boom women in their mid 40s to early 60s is bustling with competition with stores such as Chico’s, Ann Taylor and J. Jill.
Forth & Towne offered its customers several different lines with modest price points, such as $88 for a garden dress or $128 for a short trench coat. The store had a well-rounded wardrobe that could be worn at the office, at home or during evening events.
New York–based fashion buyer Mercedes Gonzalez believed that Gap fumbled what could have been a good idea. “On paper the concept was wonderful. It had all the things that the market was missing,” said Gonzalez, the director of Global Purchasing Cos. “But [Gap] fell asleep on this project. They had too many problems, so they couldn’t open new projects.”
Gap forecast that pre-tax expenses associated with shuttering Forth & Towne will be about $40 million. More than 550 Forth & Towne employees will be affected. The stores are expected to close at the end of June.
Forth & Towne’s California locations are at Westfield Century City in Los Angeles, The Oaks shopping center in Thousand Oaks, Westfield Topanga in Canoga Park, Otay Ranch Town Center in Chula Vista, Westfield San Francisco Centre in San Francisco and Valley Fair Mall in San Jose. —Andrew Asch
