Old Navy Ads Imitate Us Weekly

03/30/2009 05:12 am ET | Updated May 25, 2011

NEW YORK — Clothing retailer Old Navy, the overtly quirky Gap Inc. offshoot, is launching a new ad campaign Thursday with a flier patterned like a celebrity magazine, a bevy of mock-models it is calling "Supermodelquins" and a renewed focus on its target market of young moms.

The move is part of an effort to reverse slumping sales at the chain. As consumers cut back on discretionary spending and hunt for bargains, Old Navy, long known for its value offerings, seems well poised. But tough competition and an unfocused brand message have hurt its results.

After a sparkling debut in 1994, Old Navy enjoyed several years of rising sales and profit. But in recent years it became an increasing drag on parent Gap, which itself has seen sales sink.

Old Navy's sales in stores open at least a year, known as same-store sales, dropped a sharp 34 percent in January. That compares to an 18 percent drop at Gap-branded stores and a 22 percent drop at their sister chain, Banana Republic.

"When Old Navy launched it was an iconic brand, an early mover into the budget-priced but still somewhat trendy family apparel business," said Morningstar analyst Joseph Beaulieu. "Since then, a lot has changed, and there's a lot of competition."

Retailers such as Target Inc. and Kohl's Inc., among others, have since blossomed in the same space.

Old Navy President Tom Wyatt, 53, who took the helm as acting president a year ago this month, is the first to say the company strayed when it shifted its focus over the last two years from moms with young children to teens and "fast fashion."

"We walked away from our customer," he said, citing an ad campaign that broke last April and featured a gold-lame bikini. "That is not what a 25- to 35-year-old mom is looking for," he said.

The new TV ads, which launch Thursday on prime-time network TV, portray a variety of mannequins in Old Navy stores cracking jokes and talking to each other about denim and the value of Old Navy clothes. A circular debuting in Us Weekly Friday shows the mannequins wearing Old Navy clothes and touting one-day sales.

"We want to reassure the customer who has trusted us since 1994 that we have great product that is a great value for her family," Wyatt said.

The campaign is the latest part of an integrated effort that began shortly after Wyatt arrived, replacing Dawn Robertson. He was named president permanently in August.

For a sustained turnaround, however, product is more important than advertising, analysts say.

"The positioning part isn't even half the battle," Beaulieu said. "They've got to get merchandising right."

Wyatt readily agrees. He said new products and promotions in stores now exemplify the new focus, including a "goga" line of casual athletic wear, with yoga pants for $15, and a section in some stores devoted to items selling for $5, $10 and $15.

Mark Breitbard, named by Gap in January to the newly created role of chief merchandising and creative officer for Old Navy, is charged with guiding product strategy from conception to the arrival of products in stores. Breitbard held merchandising roles at each of Gap's brands between 1997 and 2005 before heading to Levi Straus & Co. as president of retail.

Wyatt hopes the campaign, created by Crispin Porter and Bogusky in Miami, will bring back the sense of quirkiness they say is inherent to the brand.

"There are a lot of people that portray value, but no one portrays value with our quirky spirit," Wyatt said. "Old Navy has always owned fun."