Gap Inc to Close 175 Stores
Over the years, Gap Inc. forged a reputation for building a location in every mall and in every neighborhood, but in a reversal, the company known as the world’s largest specialty-store chain announced a major wave of store closings.
Gap Inc. will close 175 stores, mostly in North America, said Art Peck, the chief executive officer, who took over the San Francisco–headquartered specialty giant. He said 140 stores will shutter this year. A limited number of stores will be closed in Europe. No Gap Outlet or Gap Factory stores, both of which focus on major discounts and promotions, will be closed.
“Returning the Gap brand to growth has been the top priority since my appointment four months ago,” Peck said. “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 eyes of consumers.”
After the current wave of store closings, Gap forecasts that 800 Gap stores, 500 Gap Specialty stores and 300 Gap outlet locations will serve North American shoppers, according to a Gap statement. The retailer intends to maintain a big fleet around the globe. There will be 1,600 company-operated and franchise locations around the world.
Jeff Kirwan, global president for the Gap brand, also announced on June 15 that 250 jobs will be cut at the company’s headquarters and offices around the country.
“These decisions are very difficult, knowing they will affect a number of our valued employees, but we are confident they are necessary to help create a winning future for our employees, our customers and our shareholders,” Kirwan said.
Gap Inc. forecasts that it will lose $300 million associated with store closures and lease buyouts, employee costs, and inventory write-offs. However, it will gain annual savings of $25 million from the store closures starting in 2016.
The specialty giant announced a wave of store closures four years ago. In October 2011, the company planned to reduce its fleet in North America and forecast that it would reduce its “square footage” by 10 percent by the 2012 fiscal year.