- Angela Gonzalez-Rodriguez |
Gap Inc. kicked off the week the hard week: the Californian brand announced that its namesake brand will close a quarter of its stores and cut 250 corporate jobs in an attempt to bring the brand back to the bright side.
The fashion retailer will see 175 stores shut across North America, not including outlets or factory stores, based on store performance, further explained the San Francisco based company. Although the retailer has not broken the details as yet, the closures will travel across the Atlantic, as many Gap stores in Europe are posed to close as well.
In total, about 140 stores will close this year leaving Gap to continue to operate about 500 Gap stores, plus 300 outlet stores.
Gap closes 175 stores in North America to regain its cool
"We're focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores," said Jeff Kirwan, global president for Gap, in a statement that tries to reassure the brand’s customers but also the company’s investors.
Gap has struggle to attract customers lately, posting a same-store sales drop of 10 percent in the first quarter. The sales dip has doubled since the same quarter a year ago.
The store closures are part of a larger trend by mall-based brands to reduce store locations, explains Simeon Siegel, a retail equity analyst with Nomura. "It's more a continuation of what's already been going on," Siegel said in a note. "Your biggest competitor used to be your neighbour in the mall. Right now your biggest competitor is the infinite number of random start-up websites. You just don't need as many bricks and mortar locations."
In the meantime, the company will axe 250 corporate jobs, primarily in New York and San Francisco, reports the ‘New York Post’.
Art Peck, Gap’s CEO, recalled that “Returning the Gap brand to growth has been the top priority since my appointment four months ago – and Jeff (Kirwan, global president for Gap) and his team bring a sense of urgency to this work,” Peck said on Monday. “Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eye of consumers.”
The corporate cuts are about increasing productivity and efficiency in decision making, as highlighted by market experts.
Gap expects to lose around 300 million dollars in sales due to the store closures and incur one-time costs of 140 million to 160 million dollars on lease buyouts and writing off inventory.