Gap Inc., an American clothing and accessories retailer is considering to shut down hundreds of its namesake stores at shopping malls as sales at the Gap brand continue to slide. This announcement came from Gap official on 20 November 2018.
According to the company, it still has 775 Gap-branded stores globally, in addition to those under the Old Navy, Banana Republic, and Athleta banners. Gap Inc. has more than 3,000 stores around the world. The namesake brand, however, has been the weakest unit of the company of late.
In the fiscal third quarter, sales at Gap stores open for at least 12 months fell 7 percent, while those at Old Navy and Banana Republic were positive.
Art Peck, CEO of Gap Inc. said, “There are hundreds of other stores that likely don’t fit our vision for the future of Gap brand specialty store, whether in terms of profitability, customer experience, traffic trends.”
“There likely will be a cash cost to exit many of these stores, which we will attempt to minimize. But I plan to exit those that do not fit the future vision quickly. I’m going to move thoughtfully but aggressively,” he added.
There are hundreds of other stores that likely don’t fit our vision for the future of Gap brand specialty store, whether in terms of profitability, customer experience, traffic trends.
Addressing the bottom half of the fleet represents over $100 million of earnings contribution opportunity and it is that portion of the fleet that is dragging down the brand.
“This is the piece of the business that we are firmly committed to addressing with urgency,” he concluded.
Some analysts are hopeful that Peck and his team are taking the right steps to get the Gap brand back on its feet, enough to not drag the parent company’s other labels down with it.
Gap has not named the specific locations it will close. However, it will give more details when the company provides its forecast for the next fiscal year.