Hundreds of Gap stores are expected to close after poor earnings reports for the namesake brand.
Same-store sales at Gap stores, which includes Gap, Old Navy and Banana Republic, grew 7 percent last quarter, but the sales at the flagship Gap brand dropped 7 percent.
The company plans to trim costs for the brand, including cutting back on real estate obligations, according to Chain Store Age. The company will evaluate Gap flagship stores to determine what locations continue to add value to the company's portfolio, CEO Art Peck said last week.
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“Beyond that, 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 ROI structure and/or near and long-term relevance to the brand,” Peck said. “These stores are a drag on the health and a drag on the performance of the brand.”
While Peck acknowledged the cost of pulling stores, he said the company plans to “move thoughtfully but aggressively.”
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There are 775 global Gap stores, including at The Greene Town Center, Cincinnati Premium Outlets, Liberty Center and Jeffersonville Tanger Outlets. The outlet stores are doing well compared to other "legacy" stores, according to Retail Dive.
The Old Navy brand is doing well, though, adding 4 percent on top of last year’s 4 percent same-store gain. And Banana Republic stores are rebounding, posting a 2 percent same-store sales increase, compared to a 1 percent decline in the third quarter last year.
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