Gap to close Forth & Towne chain

SAN FRANCISCO (AP) - Gap Inc. is closing the Forth & Towne chain that was supposed to help the struggling retailer sell more clothes to older women, aborting the 18-month expansion so management can concentrate on reviving the company's more established brands.

The decision announced Monday affects all 19 Forth & Towne stores opened since Gap unveiled the concept in West Nyack, N.Y., north of New York City in August 2005. Forth & Towne's other stores are located in Atlanta, Chicago, Houston, Seattle, San Francisco, Los Angeles, San Diego, San Jose and Santa Barbara.

The store closures are expected to be completed by the end of June, jettisoning about 550 jobs. Some of the affected employees may be transferred to one of the San Francisco-based company's other chains - Gap, Old Navy and Banana Republic.

Signaling that some layoffs are likely, Gap is budgeting $7 million to cover severance payments and other benefits for former Forth & Towne workers, according to a filing with the Securities and Exchange Commission.

Gap hoped to develop Forth & Towne into a specialty channel catering to women older than 35 who grew up in Gap jeans but found themselves sized out in the market in middle age. When it launched Forth & Towne, Gap estimated it only held a 3 percent share of over-35 female market compared to an 8 percent share of women shoppers under 35. Gap had hoped to woo boomers - who are at the peak of their earnings and spending power - back with a store that combined the service of a boutique, the broad offerings of a department store - and a more forgiving fit.

"Forth & Towne was a great test of a promising concept and an illustration of the innovative risks you need to take in our business," said Gap Chairman Bob Fisher. "We made the tough decision to close the brand and focus our efforts on stabilizing the existing businesses."

Fisher has been Gap's interim chief executive officer since last month when the retailer ended the nearly 4 1/2-year rein of Paul Pressler after a dismal holiday shopping season that represented a new low point in a prolonged sales funk.

In a key measure of a retailer's health, Gap's same-store sales fell 7 percent last year, deteriorating from a 5 percent decline in 2005. The closely watched yardstick measures sales at stores open at least a year.

Despite its troubles, Gap intends to continue investing in other promising concepts, including a recently launched online shoe store called Piperlime, company spokesman Greg Rossiter said.

Although abandoning Forth & Towne will drive up Gap's expenses by about $40 million during the first half of this year, industry analysts believe the company will be better off without the potential albatross.

"This brand never gained much traction, suffered from fit, style, and image problems and became a big distraction," Lazard Capital Markets analyst Todd Slater wrote in a Monday research note.

Retail analyst Jennifer Black said the expansion never made much sense, given Gap's troubles connecting with shoppers of all ages. "The landscape is so competitive that each retailer has to have a clear reason to be (in existence) and Forth & Towne, never had that," she said.

Gap shares fell 16 cents Monday to close at $19.65 on the New York Stock Exchange.

Scrapping Forth & Towne also may free up some merchandising talent to help with the turnaround efforts at the Gap and Old Navy chains. Analysts are particularly intrigued with the possibility that Forth & Towne's current president, Gary Muto, might now return to Gap, a chain that he led from August 2002 through September 2004.

Gap's sales improved during most of Muto's tenure at the chain. "If he were to return to the Gap brand, (it) would be a positive influence on the division," Stifel, Nicolaus & Co. analyst Richard Jaffe wrote in a Monday research note.

If Muto were to come back to the Gap, it probably wouldn't be as president because the company just promoted Marka Hansen - the former head of Banana Republic - to that job earlier this month.

Muto also once ran Banana Republic, making him a possible candidate to return to an upscale chain that has emerged as the best-performing of Gap's three brands.

Gap and Muto haven't agreed on a new assignment yet, Rossiter said. The company is expected to discuss the ramifications of the Forth & Towne closure Thursday when it reviews its fourth-quarter results in a conference call with analysts.

Forth & Towne's closure underscores the challenges facing clothing retailers catering to the graying baby-boom generation. Many merchants like Gap recently have been intensifying their focus on the niche, inspired by Chico's FAS Inc.'s successful formula for targeting boomers.

But now even Chico's is hitting a rough patch, having registered a 2.2 percent gain last fiscal year in its same-store sales. Chico's slowing same-store sales growth followed double-digit increases in the previous two years.

Forth & Towne: Gap's newest concept

By ERIC WILSON

WEST NYACK, N.Y., Aug. 23 - For the millions of American women over 35 who face the conundrum each morning of a closet full of clothes but nothing to wear, there is little solace to be found at the vast Palisades Center mall here. With nearly 300 stores and more than half of them aimed at teenage consumers, this temple of consumerism in Rockland County, about 25 miles north of Manhattan, is full of clothes, but for women of a certain age, many find little to buy.

"These stores are for skinny little girls," said Irene Giachetti, of New City, N.Y., as she was tugged at by her teenage son on a back-to-school shopping mission. "It's very difficult to find anything for me."

So it is with considerable interest in the retail industry that Gap Inc., the nation's largest chain of clothing stores, chose the Palisades Center to introduce a new chain yesterday aimed at that unwieldy and indefinable category known as grown-ups. These are customers who are past any longing for shrunken polo shirts and low-slung denim styles ubiquitous at youth-oriented stores like Abercrombie & Fitch, yet consider themselves too hip for conservative stores like Ann Taylor or Talbots, and too frugal to pursue the elitist designs that make up that minuscule slice of apparel known as high fashion.

The new chain, Forth & Towne - poetically sandwiched at the mall between branches of Forever 21 and Justice: Just for Girls - is aimed at a market that might be called the new forgotten woman. Even though women of the baby boom, now age 41 to 59, accounted for 39 percent of women's apparel purchases last year, shoppers who are much younger, 11 to 30, enjoy nearly five times the retail options, according to industry figures.

"Retailers have been looking for growth for the past several years, but frankly, they've been looking in all the wrong places," said Marshal Cohen, chief industry analyst of the NPD Group, a market research company. "Department stores had given up on this customer to chase after the youth market, and while 40 may be the new 20, these women want to dress differently."

Baby boomers spent $42.7 billion on apparel last year, compared with teenagers who spent $20 billion, Mr. Cohen said.

Sabrina Sanchez, 50, of Orange County, N.Y., who is trim, but not petite, complained that most stores aimed at women her age stocked clothes designed for larger women, based on national size averages. "I find that clothes are either too mature or too youthful, although Ann Taylor Loft might have a few things," she said. "But you don't want to look too matronly."

The new Forth & Towne stores - 4 more will be opened in malls in the Chicago area beginning next week, 5 more in 2006 and 20 in 2007 - represent the first of several retail spin-offs being developed by fashion companies to cater to older customers. Others include an unnamed project from American Eagle Outfitters and the Ruehl stores of Abercrombie & Fitch.

That trend is largely inspired by the success of Chico's, a rare example of a primarily mall-based retailer that has tapped into the boomer market, surpassing $1 billion in sales by catering to mature women with loose, colorful, easy-to-match separates.

Although baby boomers came of age in the Gap jean jackets and khaki pants, which the chain has sold since its founding in 1969, they have drifted away from the brand as they have aged. Susan Benedetto, 47, of Middletown, N.Y., who was shopping at the mall for school supplies at an Apple store for a son in college, said that she had bought only T-shirts from the Gap in recent seasons. "Everything is geared toward younger women," she said.

Gary Muto, a 17-year veteran of Gap, who was named president of the Forth & Towne brand in April, said in an interview that Gap holds 8 percent of the apparel market for shoppers under 35, compared with 3 percent for shoppers over 35. "They have the highest mean income and spend the most on apparel, and they are underserved," Mr. Muto said.

It is a generation that encompasses an expansive range of ages, body types and tastes, with perhaps the only common characteristic being that they are not typically driven by the same impulses as teenage consumers, the live-or-die pursuit of the latest trend. Forth & Towne is described by Gap executives as a destination for all women over 35: working women, soccer moms, grandmothers, suburbanites and city dwellers.

"These women come in all shapes and sizes," Mr. Muto said. "They want stylish clothes that are age appropriate; they want an easy shopping experience"

When research showed Gap executives that women over 35 cannot be easily categorized because of their eclectic tastes and lifestyles, the company came up with the idea of stocking its stores with four different brands, one in each corner, that address different customer profiles.

Career women who might shop at Ann Taylor or Banana Republic will find similar styles at the front of the 8,000-square-foot Forth & Towne, under the label Allegory, including $48 purple and pink merino wool sweaters and structured jackets, skirts and coats. A second label, Vocabulary, is more like Eileen Fisher and Chico's, with forgiving oversized knit sweaters and a chunky knit flecked oatmeal cardigan at $128.

More casual looks hang in the back of the store, under the name Gap Edition, based on the company's sportswear classics, including jeans and $98 cotton rain jackets in purple, pink and khaki. Prize, the trendiest label, includes a pleated black satin skirt with a grosgrain ribbon waistband, $78, several satin flounce skirts, an $88 plum velvet blazer and a range of lace-trimmed transparent tops.

Austyn Zung, senior vice president for design at Forth & Towne, who formerly worked for Oscar de la Renta, said that her target customers were so varied that she designed for different tastes, but with a common fit. Forth & Towne's biggest innovation is to scale its sizing based on a fit model who is a size 10, rather than the industry standard of 8. Its sizes range from 2 to 20, whereas Gap stocks only to size 16.

Margaret Mager, a managing director of Goldman Sachs, who toured the prototype store Tuesday during previews for retail analysts and the press, and is also a member of its target audience, said she was pleased with the selections.

"It is like four stores in one," Ms. Mager said. "Instead of trying to target too narrow a customer, what they've done is develop a store that has four different ideas that can work for any one customer, because no one is that narrow in what their needs are. "

Banc of America Securities issued a research report describing the Forth & Towne concept as novel, "but perhaps uneven."

"We think the collections are a little hit and miss and are likely to take a while to work out the kinks," the report continued. "Also, with 90 percent of the price points under $100 - in a store that includes outerwear and blazers - not everything may offer the quality the shopper expects."

Analysts also said that because of the slow introduction of the Gap's latest brand - in addition to Gap stores, the company owns Banana Republic and Old Navy - Forth & Towne will have little impact on the company's stock, which has fallen about 7 percent this year.

And as an indication of the degree of skepticism that some members of its target audience hold for the company's approach to mature consumers, a blogger in Chicago noted on April 21, the day Gap disclosed the name of its new chain, that Forth & Towne could be called F.A.T. for short.

"Let people think what they think," Mr. Muto said. "We believe we have an exciting, unique concept these women haven't seen before."

Gap Goes Fourth

Forth & Towne is the name of the newest retail concept for 35+ women

(VisualStore.com) - Gap Inc. (San Francisco) has announced that Forth & Towne is the name of the company’s new women’s apparel retail concept. Forth & Towne represents the fourth, and newest, concept in Gap Inc.’s family of brands, which includes Gap, Banana Republic and Old Navy.

“Launching the brand Forth & Towne, which focuses on women over age 35, represents an important long-term growth opportunity for Gap Inc.,” said Gap president and ceo Paul Pressler.

Forth & Towne will launch in four test stores in the Chicago market and one in New York in the fall of 2005. It will offer a broad range of sizes, with a focus on fit, and assortments that serve a variety of occasions.

“We created an address with the name ‘Forth & Towne’ because we wanted it to evoke a sense of place -- to signify a special and unique shopping destination,” explained Gary Muto, president of the new division. “ ‘Forth’ references our fourth brand and ‘Towne’ conveys a sense of community that we want to create for our customers when they shop with us.”

Women over the age of 35, a rapidly growing segment of the population, is said to have, as a group, a spending power that accounts for about 39 percent of women’s total apparel expenditures.