TEXT OF STORY

Renita Jablonski: The Gap announces earnings today. Old Navy and Banana Republic are part of the chain, and like other retailers, it’s been hit hard by the recession. But as Ashley Milne-Tyte reports, its problems go back even further.

Madonna: Get into the groove, let me show you some moves.

Ashley Milne-Tyte: Even Madonna cavorting in Gap jeans didn’t do anything to lift sliding sales when those ads ran a few years ago.

Kimberly Greenberger is a senior retail analyst at Citigroup. She says while Gap and Old Navy have been floundering for several years, Banana Republic was doing pretty well. Until last year.

Kimberly Greenberger: Professional and wear-to-work clothing — and in particular, the suiting category — really came under the most severe pressure in the economic downturn of the second half of ’08.

She says one of Gap’s main problems is retail space.

Greenberger: Many of their stores are too big. They could be much, much, much smarter about the way that they utilize real estate.

But Greenberger says that’s something they’ll have to tackle over years as leases come up for renewal. The other problem, she says, is that Gap, Banana Republic and Old Navy each used to dominate their fashion niche. Now, they’ve got plenty of rivals.

In New York, I’m Ashley Milne-Tyte for Marketplace.