Gap to Close More Than 150 US Stores, but Expands in China
More than 150 Gap stores in the United States will be closed by the end of 2013, executives said Thursday at an investor meeting in New York.
Detailing plans to close 189 of their locations within the next two years, the San Francisco-based company, which also runs Old Navy and Banana Republic, is implementing a new strategy, looking to reduce their total square footage of Gap stores by 34 percent, according to The Associated Press.
They are also looking to reduce the total square footage across their other brands as well, but their focus remains on Gap in particular.
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Gap has experienced a decline in sales now for a considerable period of time, with a 2 percent drop in overall revenue during the second quarter.
During the last six years, Gap’s namesake brand stores in North America have yielded an annual revenue drop, down 3 percent for the quarter as well, AP reported.
Additionally, attempts to restructure and revitalize the business have not altogether succeeded, even with a new brand president, chief marketing officer, Gap design director and ad agency as well.
Hoping to improve profitability, executives decided to reduce the size and number of stores during the last few years, continuing to do so in the near future.
“Over the next 26 months, we’ll look store by store at our specialty fleet and determine which stores meet the standards we’ve set for our brand,” Art Peck, president of Gap North America, shared, according to AP.
“This is a continuing of our work since 2007,” the president added. Peck took over the brand in February.
Seven hundred U.S. and Canada Gap stores and 250 Gap Outlet stores will remain in sales by the end of 2013. In July, the Gap brand listed 998 stores in the United States and 93 in Canada.
Old Navy will also reduce its square footage in North America, removing up to 1 million square feet of selling space from the overall total square footage, Atlanta Business Chronicle reported.
“In North America, we’re taking a number of steps to improve sales in the near-term, and I’m confident that with a strong management team in place, we’re well positioned for sustained growth across the business,” AP quoted Glenn Murphy, Gap’s CEO.
However, while trimming down U.S. stores, the company plans to triple the number of Gap stores in China and expand their emerging brands like Athleta and Piperlime, which are together helping drive sales.
Gap plans to test a brick-and-mortar Piperlime store concept in 2012, performing a similar test with their Athleta brand as well.
“The combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide,” Murphy said.
