-By Gregory Solman

LOS ANGELES Old Navy will hear from top shops next week as part of a review to choose an agency to handle creative on its $210 million account, said sources.

Michael Cape joined Old Navy from JC Penney as evp of marketing in February 2007. For a second time in recent years, the retailer quietly left Interpublic Group's Deutsch/LA, Marina del Rey, Calif., pulling creative in-house and using freelancing shops.

A source said the brand is struggling with its identity at the bottom of the Gap Inc. empire, below upscale Banana Republic and middle-tier Gap, and has proven difficult to work with. "They want to do something conceptual and creative, and they go through all the motions, then it becomes all about retail, with the agency being told in the end that they just don't understand fashion," said a source. "And you can't make money on it, because you agree on a strategy, then later they get real subjective about the work."

The retailer declined to comment.

Tom Julian, president of brand consultancy Tom Julian Group, New York, said that while Old Navy was "the first family-friendly apparel brand to have a tongue-in-'chic' approach to marketing, others have learned from them and do it better.

"In the last year or so, Old Navy's creative has been tied to cheap fashion and junior-friendly product, which is a hard category to TV advertise and reach the shopping enthusiast, post teen," said Julian. "The brand has an upward battle to sell itself on fashion and style when their foundation has been basics, value and price."

Old Navy, based in San Francisco, spent $210 million on media in 2007 and $75 million through May 2008, per Nielsen Monitor-Plus.