Gap Inc has announced it is closing 230 stores and splitting off Old Navy brand, a restructuring to “revitalizing” the company
It is part of a strategy to “revitalize” Gap, and generate more of its sales online, which it hopes will reach 40% of total revenues. As a part of “revitalizing” the company.
In the latest financial results, Gap Inc said that sales at its namesake stores fell by 5% over both the fourth quarter and the full year. In the fourth quarter, operating profit fell to $372m from $396m on sales marginally lower at $4.6bn.
On the other hand, same-store sales were flat for Old Navy in the fourth quarter but rose by 3% over 12 months.
Gap Inc said it had already closed 68 of its stores, leaving 742 Gap stores globally. Gap said the closures would mainly be in North America.
Old Navy will be a standalone company while a new business, which is yet to be named, will house Gap as well as its other brands including the Banana Republic.
Christina Boni, vice president at Moody‘s, the rating agency, said, “Old Navy continues to outpace Gap Brand and Banana Republic and is one the fastest-growing major apparel brands with comparable stores of 3% in 2018 growing to over $7.8bn in 2018.”
Once a popular brand among youth, Gap’s popularity in recent years has declined.
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