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Gap's Banana Republic Brand to Launch Style Passport in US

Zacks Equity Research

The Gap, Inc.’s GPS iconic brand, Banana Republic, announced plans to launch Style Passport for its women's apparel collection at the end of September in the United States. This is an online service, wherein subscribers are allowed to rent the brand’s products for a flat monthly fee with choices to keep and purchase the rented items. The company is likely to launch this service for men's apparel range later on. Furthermore, Banana Republic will provide Buy Online, Pick Up in Store facility beginning this fall.

Style Passport will cost $85 each month, covering a three-garment plan including free shipping, exchanges, and laundering facility. Banana Republic has collaborated with the rental technology platform, CaaStle, to develop and enhance Style Passport. Also, CaaStle’s white glove service is expected to deal with logistics to offer shoppers a unique experience.

Impressively, the latest service is expected to reach out to more customers, helping the company to collect exclusive and valuable shoppers’ insights. Style Passport will also aid the company to introduce more enhanced and trendy products, and, in turn, fetch incremental revenues and boost profitability.

Notably, Gap has been enhancing its e-commerce and omni-channel capabilities by adopting a number of initiatives. The company has increased online presence across all of its brands. In fact, its online division is one of the most profitable segments, with robust sales growth. Evidently, robust online trends in first-quarter fiscal 2019 led to high-teen comparable sales (comps) growth driven by increase in traffic and conversion.

Moreover, the company has rolled out the Buy Online Pick Up in Store for its Old Navy brand throughout the nation, which is receiving a positive response from customers. Previously, the company expanded omni-channel endeavors like the “find-in-store”, “Reserve-in-Store” and “Order in Store” capabilities across various stores. We believe that all these initiatives combined with constant digital investments should boost Gap’s top line and profitability.



Price Performance

This Zacks Rank #4 (Sell) stock has lost 38% so far this year, wider than the industry’s 31.4% decline. This downside can mainly be attributed to the persistent softness at the company’s namesake brand for quite some time now.

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