- Robyn Turk |
Despite an increase in profits reported in its Q3 earnings, Gap is closing stores. The American brand’s revenue increased by 7 percent, with a net profit increase to 266 million dollars. However, in comparison to the Gap Inc. parent company’s other labels such as Old Navy and Banana Republic, the namesake brand is the weakest. Overall sales in the last 12 months have fallen by 7 percent.
Gap currently operates 775 stores globally, and is now considering closing down hundreds of underperforming locations, including flagship locations, “with urgency,” in order to make up for falling sales.
“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,” chief executive officer Art Peck said in Tuesday’s earnings call. “There likely will be a cash cost to exit many of these stores, which we will attempt to minimize. But I plan to exit those that do not fit the future vision quickly. I’m going to move thoughtfully but aggressively.”
The retailer has not yet decided an exact number of store closures or which store locations will be shut down. Peck plans to share a more detailed store closure outline when the company announces its plans for the next fiscal year.