Gap to close hundreds of stores “with urgency”
The flagship brand of American apparel group Gap Inc is looking to close hundreds of its stores urgently, group president and CEO Art Peck said in an earnings call on Tuesday.
“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, importantly the ROD structure and/or near and long-term relevance to the brand,” Peck said.
“There likely will be a cash cost to exit many of these stores, which we will attempt to minimize with appropriate sequencing. But I plan to exit those that do not fit the future vision quickly. I’m going to move thoughtfully, but aggressively.”
The announcement came after another weak quarterly performance for the Gap brand, which continues to be outpaced by sister brands Old Navy, Athleta and Banana Republic.
The group did not announce which of its 775 locations are scheduled to close, but noted that that the number could include some of its global flagships.
“Addressing the bottom half of the fleet [of global locations] represents over $100 million of earnings contribution opportunity and it is that portion of the fleet that is dragging down the brand,” Peck said. “This is the piece of the business that we are firmly committed to addressing with urgency.
“It includes some amazing flagship stores around the world that we’re evaluating with an objective eye on which ones provide sufficient value to keep. Collectively, the flags have meaningful negative contribution.”
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