November 23, 2018
Gap is considering shutting hundreds of its eponymously named stores at shopping malls nationwide, as sales of the nearly 50-year-old clothing brand continue to slide, CNBC reported on November 21.
The retailer said that it still has 775 Gap-branded stores globally—in addition to those under the Old Navy, Banana Republic, and Athleta banners, for a total of 3,000. The namesake brand, however, has been the weakest unit of the company of late, the cable business news network reports.
In the third quarter, sales at Gap stores open for at least 12 months fell 7%, while those at Old Navy and Banana Republic were positive; rising to a positive 4% and 2%, respectively.
“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…” CEO Art Peck said during a call with analysts on November 20. “The range from the very best to the very worst stores is extremely broad.”
Peck, who has held his position since October 2014, said that. should the company “address” the bottom half of its fleet of Gap stores, it could contribute more than $100 million to earnings
CNBC, which listened in on the call, said that Peck noted that the company is looking to make decisions about shutting stores “with urgency,” including looking at closing some of Gap’s “amazing flagships.”
“There likely will be a cash cost to exit many of these stores, which we will attempt to minimize…” Peck told analysts. “But I plan to exit those that do not fit the future vision quickly. I’m going to move thoughtfully but aggressively.”
Gap shares were recently up about 3.5% on November 21 . The stock has fallen more than 25% already this year.
According to CNBC, Gap hasn’t named the specific locations it will close but said it will give more details when the company provides its forecast for the next fiscal year.
Research contact: @laurenthomasx3