Gap's Story Still Has Holes

Nine words spoken on Gap's (GPS) conference call Thursday evening confirmed to me the company is nowhere near a turnaround. Despite management saying the right things in many instances -- more risk-taking in the creative area, reigning in expenses, etc. -- nine words fully explained the problem at the company.

The issue? The company doesn't know who its customers are.

Marka Hansen, the new head of Gap North America, was full of confidence and passion as she outlined the goals she fully expects the company's namesake brand to achieve. Early in the call, Hansen described the problems Gap ran into regarding its marketing. She discussed how the various marketing messages were confusing because they appealed to various target demographics.

That's when she uttered the nine words that told me Gap doesn't have anything figured out yet.

"... we haven't landed on a specific target customer today...," Hansen said. She told investors the target will lie somewhere in the 18 to 35-year-old range but will clearly not be the 18-year-old. OK, so now we're talking the 19 to 35-year-old range. Hey, that's a start.

Knowing your customer is vital for most businesses, but it is especially critical in the ultra competitive apparel industry. Chico's FAS (CHS) and Coldwater Creek (CWTR) are well aware that teenyboppers are not the ones spending money on Animal Craze Desiree Jackets. Abercrombie & Fitch (ANF) designed its Hollister stores so that any 30-year-old would be sent scampering back to his cubicle from the scornful looks of the hip teens in the shop.