Now's the time to stock up on those classic striped sweaters and denim styles.
Gap Inc. announced Thursday that it plans to shutter approximately 230 stores in the next two years. Last year, the San Francisco-based corporation had a total of 725 specialty stores (excluding those in China), and this week, the company revealed it saw a 5 percent decrease in the brand’s global sales, according to its 2018 earnings report.
“To identify the stores for closure, we focused on those that were not delivering appropriate levels of contribution. We're in the wrong locations or otherwise we're not a strategic fit in the fleet,” Teri List-Stoll, executive vice president and chief financial officer, said in the company’s fourth-quarter earnings call. “Our objective is to ensure the remaining fleet is located and sized appropriately, and can generate sufficient returns to warrant the investment to remain brand appropriate and provide a positive customer experience.”
Gap Inc. has yet to finalize its list of stores that will close.
In an emailed statement from its public relations firm, Gap Inc. told TODAY Style, “Through this work, we will have a smaller, healthier base stores to play an important role in the omni experiences our customers’ demand ... We believe Gap brand will be well positioned to compete effectively with an omni-model that offers locations, formats and experiences that serve our customers shifting shopping patterns.”
The 50-year-old retailer has been struggling to turn a profit in the last several years. Gap estimates that it will lose about $625 million due to the store closures but will ultimately save about $90 million through the process. As physical stores go out of business, the clothing chain hopes to shift more than 40 percent of its sales to their e-commerce division.
The company started as The Gap in 1969, focusing first on denim items at a midrange price point and became synonymous for its classic American style — even former President Barack Obama is a fan. Gap has since expanded to include GapBody, GapKids, babyGap, and factory and outlet stores. Its first international outpost opened in London in 1987, and today Gap apparel is sold in more than 90 countries worldwide.
News of the store closures comes after Gap Inc. said it would split the company into two separate entities — Old Navy and another company that has yet to be named.
Old Navy, which launched in 1994, has made a name for itself with budget-friendly clothes for the entire family. Buoyed by rapid growth, the company actually anticipates opening more stores in the coming year.
Sonia Syngal, the president and CEO of Old Navy since 2016, will stay in her role, which makes her the 28th female CEO to lead a potential Fortune 500 company. The spinoff company will be led by current Gap Inc. president and CEO Art Peck and would incorporate Gap, Athleta, Banana Republic, Hill City and Intermix brands.