• Business Week, Friday, November 27, 2009 10:46 AM

Susan Berfield writes that "internal disagreements, management turmoil, and tanking sales" were responsible for Old Navy's early termination of its much-touted relationship with celebrity designer Todd Oldham. It has opted instead to execute a back-to-basics strategy that it feels is easier to execute in hard times.

Sales are up, in fact, but that doesn't necessarily mean the retailer did the right thing, according to some observers. "Old Navy lacks an identity now," says consultant Robert Burke. "A retailer needs buzz. Saying you're basic puts people to sleep."

Berfield deftly reconstructs some of the behind-the scenes drama behind Oldham's rise and fall at the Gap-owned retailer, including a suit and countersuit. She leaves us with the impression that Oldham may have been jettisoned too soon. Needham analyst Christine Chen, who generally supports the company's direction, has the last quote: "Old Navy could have given the [Oldham] collaboration a little more time," she says. "A major overhaul like that takes time for customers to figure out."

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