Analysis: Why are sales down at so many women's stores? They made bad clothes.
Shoppers have shaken off their recession-era caution: They're ponying up for big-ticket appliances, taking a record number of summer airline trips and splurging on novelty items such as drones. Strong consumer spending is a bright spot in a recovering U.S. economy.
But you wouldn't know any of this based on the performance of some of the biggest names in women's clothing.
Anthropologie has posted four straight quarters of flat or declining "comparable sales," a measure of results on its website and in its stores open more than a year. J. Crew's comparable sales fell 10 percent last year and sank 8 percent in the first quarter of 2016. Banana Republic has seen a decline in comparable sales for the past 13 months, including a staggering 14 percent plunge in July. Gap's sales are weak, and Ann Taylor's have taken a gloomy turn recently, too.
This slate of mega-retailers has long been among the prime draws to the mall for middle-class women, offering apparel that they could easily mix and match into outfits for client meetings, kiddie birthday parties or date nights. But lately, they can't seem to design clothes that women want to buy. In other words, people think their clothes are ugly.
And the stores have acknowledged, to varying degrees, that their products need work. Ann Taylor officials say the clothing line is undergoing a process to "evolve the fit" to reflect a more "modern point of view." (Translation: The cut of its pants and other items is dated.) Art Peck, the chief executive of Gap, said recently that the chain's summer clearance racks are full of colorful T-shirts; it had stocked too many different versions of this basic item but failed to offer enough of the trendy off-the-shoulder tops and lace blouses that customers were more interested in. Most glaringly, Banana Republic has acknowledged that it struggled to sell a blazer last year because women couldn't fit their arms into the armholes. Yes, a venerable clothing brand that raked in $2.65 billion in 2015, manufactured a jacket that was physically unwearable.
While the rest of the retail world is focused on how to handle massive cultural shifts such as the rise of online shopping, these women's-apparel stalwarts are scrambling to dig out of holes of their own making. They're now trumpeting their turnaround plans, vowing to once again nail their fits, fabrics and styles. And some say those efforts are beginning to work. But if you're a woman who suddenly finds that the mall resembles a wardrobe wilderness, accept this consolation: It's not you. It's them.
The problems have been building for some time. In early 2015, J. Crew chief executive Mickey Drexler offered investors a frank assessment of what had led to "a tough year" at his company. Mall traffic was sluggish, and pressure was high to offer "30 percent off your purchase"-type promotions. But, he said, J. Crew also messed up its clothing designs: The aesthetic of some classic pieces was off, the color palette was a snooze, and some garments didn't fit right. That meant women didn't get what they expected from the brand. "An iPhone looks like an iPhone. And I don't think J. Crew women's looked like J. Crew women's as much as it could have," Drexler said.
That was before J. Crew whiffed with the Tilly sweater, a wool top with a shrunken, cropped fit that sold so poorly, Drexler called it "a big mistake." The sweater has become a notorious symbol for a J. Crew's wider problems.
Soon, Anthropologie was admitting that it had struggled to merchandise for its customers' lifestyle: The bastion of bohemian-chic suffered last year when it didn't offer enough casual dresses, apparently failing to understand that shoppers' calendars were heavier on weekend barbecues than cocktail soirees. It also acknowledged that it didn't deliver some of the silhouettes and fabrics women were looking for.
Dress sales at Anthropologie shot back up in the most recent quarter, but clothing sales were still down overall, suggesting that the flawed design sensibility simply reared its head in other categories. Executives admitted this month that the brand is still not hitting its fashion mark - and that it probably won't see meaningful improvement until after the holiday season.
These brands have misread their customers in other ways, too. Ann Taylor has been slow to adapt to loosened office dress codes and a moment when women want versatile pieces that go from work to weekend. Banana Republic faltered when it tried to push a trendier vibe on its audience of cubicle warriors and soccer moms. In February, Peck - the chief executive of Gap, Banana Republic's parent company - said, "We took Banana to a place where we were trying to lead on fashion and trend, and she does not want Banana to be that." Executives are working on a return to the classics, but sagging sales show that it hasn't resonated yet with customers.
Gap's fashion misfires have been brewing even longer, with the brand initially caught flat-footed by the arrival of fast-fashion chains such as H&M and Forever 21. Gap has pivoted to more cheery colors and more ladylike silhouettes after customers balked at the minimalist, somewhat androgynous designs unleashed by former creative director Rebekka Bay. Around the time Bay left the company, Peck reportedly said to employees: "It's a sign of the times, unfortunately, that when there was an Ugly Christmas Sweater Party at the company, some of the sweaters there were from our current assortment."
The chain had promised we'd see green shoots of a turnaround this past spring, and Peck says Gap has made strides in getting its fit and styling right. But comparable sales have been flat or negative every month this year.
Fit and styling mistakes are not the only reason midpriced women's apparel retailers are struggling. Mall traffic was down 5.8 percent in the past year, creating headwinds for all kinds of traditional brick-and-mortar stores. Many shoppers are choosing to spend their dollars on experiences - such as travel or dining out - rather than goods. And off-price players such as Ross, T.J. Maxx and Marshalls have been winning over new shoppers with their treasure-hunt atmosphere, adding to the strain created by the likes of Target and H&M, which are offering stylish pieces at low prices.
Other midpriced apparel retailers point to further problems: Macy's believes that its sales have been hampered by unusual weather patterns and crimped spending by foreign tourists. Ralph Lauren is slashing $220 million in annualized costs and cutting about 1,000 jobs to streamline what had become an unwieldy organization.
Still, the depth and persistence of today's trouble is baffling, considering the relative strength of these specialty apparel stores compared with other corners of the retail industry. For one, fashion is a rare shopping category where e-commerce giant Amazon.com is playing catch-up. The enormous pressure that Amazon has put on booksellers, toy stores and others has not been fully brought to bear in apparel. (Jeffrey P. Bezos, chief executive of Amazon, owns The Washington Post.) And apparel is hardly facing the kind of sweeping cultural change that has shaken brands like McDonald's, which is dealing with a long-term move toward healthy eating. People still have to get dressed. And many of them care as deeply as ever about style.
The errors could be related to these retailers' race to adapt to the breakneck speed at which style trends now move. H&M, Zara and other fast-fashion brands have dramatically accelerated how quickly an idea can get from the design studio to the store, compressing that process from several months to a matter of weeks. And shoppers have much more access to what's hot, thanks to live-streamed runway shows and a steady diet of Instagram photos. As a result, retailers are rethinking all aspects of the business, from supply chains to design calendars to marketing tactics. Amid those dizzying attempts at transformation, it's been hard to get the basics right.
"They can't do everything at one time. As they try to retool their supply chains, something's gotta give," said Carol Spieckerman, a retail industry consultant. "And in some cases, that's quality, consistency and offering compelling fashion."
Meanwhile, the vicious cycle of promotions - those "30 percent off your purchase"-type offers - drew in retailers desperate to maintain sales through the recession and its immediate aftermath. But now many customers simply expect this rhythm and won't pay full price, knowing another promotion is always around the corner.
When retailers have to bake in these discounts, "That's going to change the quality of the production, it's going to change the quality of the materials," said Randy Allen, a former Kmart executive and a senior lecturer at Cornell University who studies retailing.
Did Banana Republic think women wouldn't notice that some of its dress pants cost $98, but are unlined and made of synthetic fabric? Did Anthropologie think shoppers would blindly plunk down $88 for a shapeless T-shirt dress made of spandex and jersey? Women will gladly pay up for items they think are worth the price: One need only look at the strength of prestige beauty-product sales, such as contouring makeup and CC creams, which were up 7 percent in 2015, for evidence of this. But women want price tags that they believe are commensurate with quality, and these apparel retailers are not consistently delivering on that.
There's hope, though: Women's fashion is reaching a tipping point, where the skinny jeans and flowy tops of the past decade are about to give way to a new aesthetic. Wide-leg pants are storming the runways and popping up on store shelves. Choker necklaces and block heels are suddenly inescapable, after being neglected by the masses for years. Analysts say such a big change in style could give women fresh motivation to spend money on clothes. If stores wow them with their takes on the latest trends, shoppers might forget how badly they dropped the ball at the end of the skinny-jeans era.
Plus, fast-fashion and off-price concepts have left some openings for the specialty stores to claw back. Fast-fashion items are known to fall apart after a few wears; some women don't want to replace their clothes frequently. And while the hidden-gem atmosphere of T.J. Maxx has appeal for many shoppers, wouldn't some time-starved moms and professionals rather get in and out quickly at a smaller, tightly edited store? The explosive growth of Madewell, a sister brand of J. Crew, and the market-share dominance of Victoria's Secret show that women will still shop specialty stores, so long as they're offering the good stuff.