Gap to Close 200 Banana Republic, Gap Stores -- Update
September 06 2017 - 1:05PM
Dow Jones News
By Khadeeja Safdar
Gap Inc., plans to close about 200 Banana Republic and Gap
stores over the next three years, while opening new Old Navy and
Athleta locations, shifting its footprint to budget and athletic
brands as shoppers search for bargains.
At an investor conference Wednesday, Chief Executive Art Peck
said the company's online and lower-priced businesses are more
profitable and attracting more shoppers than its specialty
businesses, which include Gap and Banana Republic. "We will
continue to move in this direction," he said, "and selectively
diminish our exposure to specialty."
Over the same period as the Gap and Banana Republic closures,
the company expects to open about 270 new Old Navy and Athleta
stores. The company is also exploring smaller-format stores in
cities.
Wardrobe basics have evolved since Gap's heyday, with many
customers swapping out its casual uniform for yoga attire. Gap
brand and Banana Republic have been getting squeezed as more niche
brands chase an affluent customer, and fast-fashion and off-price
chains woo the frugal. Sales at both divisions fell last quarter
compared with the year-earlier period.
Old Navy, Gap's budget brand and biggest division by sales, has
been a bright spot for the company, helping to shore up its results
even as other brands have struggled. Mr. Peck on Wednesday referred
to Old Navy as pulling the company and noted that Gap and Banana
Republic are still recovering from past "creative mistakes."
Gap said it expects Old Navy sales to exceed $10 billion over
the coming years. It expects Athleta, its athletic-wear brand, to
exceed $1 billion in sales during that time.
Since he became CEO in 2015, Mr. Peck has closed hundreds of
stores, eliminated creative directors and expanded the role of
outside vendors. The former management consultant has also
emphasized the use of market-research data to monitor trends.
The latest closures, which the clothing retailer said would
focus on underperforming, "lower-productivity" locations, represent
about 10% of Gap's global Banana Republic and flagship stores,
according to its financial results reported in August. Across all
its apparel brands, it has about 3,600 company-operated and
franchise stores.
It expects to save about $500 million over that period as a
result of the closures and other operational changes.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
September 06, 2017 12:50 ET (16:50 GMT)
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