Banana Republic CEO leaves, signaling a return to fashion basics after a misstep at home

News just broke that Banana Republic President and CEO Sandra Stangl has been shown the door. While a company spokesperson responded No comment to my request, WWD obtained an internal note from Gap
Gap
Richard Dickson, CEO of Inc., said: As we close out the first quarter of the year, Sandra and I have agreed to transition to new leadership at Banana Republic.

He added: “Each of our brands strives to set the fundamentals to drive both relevance and revenue. Sandra and the teams began laying the groundwork to reestablish the brand and allow it to thrive in the high-end lifestyle sector. And I look forward to identifying a new leader to take Banana Republic to the next level.

Fixing the fundamentals is exactly what the next leader of Banana Republic needs to do, because Stangl completely blew them by taking the already struggling fashion brand and expanding into the fashion business. furnishing category.

Relevance and revenue suffered when the brand took its eyes off price and ventured away from its fashion mandate into the home category where it had no authority and faced entrenched competition.

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Disappointing Earnings Report

In the latest earnings report in March, the company reported that its fiscal 2023 revenue fell 5% to $14.9 billion and Banana Republics fell 8% to $1.9 billion.

Dickson advised Banana Republic to go back to basics with a focus on wardrobe staples and BR classics like knits, oxfords, separates and khakis, the products that Banana Republic is famous and will be famous again. .

He made no mention of the brand's misstep in the house and that's a good sign. While warning that Banana Republic's recovery will take time, Dickson stressed the need to better execute many of the fundamentals in 2024.

At its core, Banana Republic is a fashion brand and it is this fundamental that Gap Inc. must reestablish.

Miss the mark

Banana Republic's peak came in 2014, when sales reached nearly $3 billion. Before the pandemic in 2019, it had fallen back to around $2.5 billion, then was hit by the pandemic and fell to $1.5 billion in 2020.

Stangl joined the company in late 2020, after working throughout his career in the furniture industry, including 23 years at Williams Sonoma. Its initial results have proven promising, with Banana Republic's revenue reaching $2 billion in 2021, then growing to $2.1 billion in 2022.

However, in 2023, after the highly publicized launch of BR House Collectionwhere she and her team obviously spent most of their time, revenue plunged to $1.9 billion.

Looking back, Stangl can't take much credit for Banana Republic's two-year post-pandemic recovery. If anything, it gives it a black eye compared to overall industry performance.

Fashion clothing and accessories retail store sales grew 7.5% between 2021 and 2023, from $290.7 billion to $312.5 billion in 2023. Banana Republic completely missed this rising tide.

Correct the mistakes

To Dickson's credit, he learned fairly quickly that Stangl was not the leader to advance the fundamentals of Banana Republic. She was determined to make the house the cornerstone of the brand's lifestyle strategy.

Our expanded Home collection is at the heart of our vision to be the first lifestyle brand that positions BR as an experiential and cultural cornerstone in our customers' lives, she said while presenting her first foray in upholstery in March 2023, followed by furniture under the BR Home banner in September, now featured in 19 Banana Republic stores.

Ana Andjelic, brand director at Banana Republic, one of Stangl's first hires, saw the writing on the wall and left the company after less than two years, joining Esprit at the end of 2022.

Andjelic has an impeccable track record as a brand strategist, appointed three times to the Forbes Top CMO list, most recently for his work with Esprit. His professional experience was rooted in fashionincluding time with Mansur Gavriel, Rebecca Minkoff and executive brand consultant for David Yurman.

Andjelic was the perfect choice to reestablish the brand's fashion credentials, and one can imagine she was frustrated that Stangl was a victim of Maslow's hammer syndrome: if the only tool you have is a hammer , you tend to see every problem as a nail.

The house in purgatory

At this point, Banana Republic is probably too far into the local category to make a quick exit. Earlier this year, as speculation swirled that BR Home Collection was on the rocks, a spokesperson told WWD that the company was committed to home collection and strongly denied the line would be discontinued.

My guess is that Home will be sidelined in hopes of being able to sell some of its existing inventory, as well as additional bedding, dining and bath products it has ordered, while Dickson searches for a leader in Banana Republic which will be able to restore the fashion of the brand. fundamental.

Some home furnishings, like bedding, pillows, and throws, may make sense in the long run, but most of the rest is a distraction that the brand definitely doesn't need right now or maybe ever.

Meanwhile, Dickson has an asset he could deploy for Banana Republic's revival: the famous fashion designer Zac Posen.

Posen joined the company in February to turn around the Old Navy brand, the largest in its portfolio, generating $8.2 billion in sales in 2023. But in addition to serving as Old Navy's chief creative officer, Posen is also executive vice president and chief creative officer. of Gap inc.

Posen's creative eye and established authority in the luxury market could prove particularly useful in elevating the reputation of the company's high-end, near-luxury brand, Banana Republic.

See also:

ForbesBad timing: Banana Republic launches the BR Home furniture collectionBy Pamela N. Danziger