Gap to Close a Quarter of All U.S. Stores, Slash 250 Jobs
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In yet another sign of the ominous quandary facing certain specialty retailers today, Gap has announced that it will shutter a quarter of its North American stores over the next three years.
All told, this amounts to 175 store closures -- 140 of which are scheduled for this fiscal year, the company said in a statement. In addition, Gap said it will slash 250 roles from its headquarter workforce this year.
Notably, these moves won’t affect Gap’s outlet locations. After the cuts, the brand will count a total of 500 regular Gap stores and 300 outlets stateside. Though these closures will cost the company hundreds of millions of dollars in the short term, Gap estimates annualized savings of $25 million beginning in 2016.
The announcement arrives on the heels of word that J. Crew is similarly eliminating 175 jobs and replacing its head of women’s design after same-store sales plummeted 10 percent last quarter.
Other beleaguered specialty retailers include Abercrombie & Fitch, which recently replaced its polarizing CEO and announced it would no longer hire employees based on physical attractiveness, as well as American Eagle and Aeropostale, which are abandoning logo-ridden clothing in order to drum up sales.
The shift away from these long-loved brands is a result of the growth of fast-fashion retailers like Forever 21, H&M and Zara, as well as discount shops including T.J. Maxx and Marshall’s. Of Gap’s portfolio, which also includes Banana Republic, Intermix and Athleta, its top-performing entity is also its least expensive: Old Navy.
While U.S. physical locations are suffering at the Gap, its presence in China is strong, where sales have grown to nearly $500 million in just over four years and ecommerce sales increased by about 60 percent from 2013 to 2014.
“Customers are rapidly changing how they shop today,” said Gap’s newly appointed CEO, Art Peck, in a statement, “and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers.”