Gap's Story Still Has Holes

I also question Gap's decision to convert 45 Old Navy outlets into regular stores. Management said the outlets already have a mix of products including regular-priced merchandise, so it won't be such a drastic change for the brand. There will be a cost savings associated with the modification, as a distribution plant in Kentucky will be closed.

But with Old Navy traffic in the dumps, why would management want to take away a reason that people actually visit an Old Navy? There are some shoppers who love outlets. Bargain hunters hoping to find cheap merchandise at an outlet may be pleasantly surprised by what they see for full price at the store. But taking away the "outlet" tag will drive away some shoppers while doing nothing to attract new ones. If Gap were simply closing the locations, I would understand. But to convert them to what I have to believe is a less popular store is curious.

Interim CEO Robert Fisher spent time on the call detailing what has gone wrong over the years. One aspect he is trying to fix is a centralization of the company meant to control costs. However, Fisher said, it added a layer of bureaucracy that stifled the independence of the company's brands. Some areas, such as finance and IT will remain consolidated, but while the move makes sense, it reverses some of the cost efficiencies the company had hoped to institute.