GAP INC TO CLOSE 75 STORES THIS YEAR IN RESPONSE TO CONTINUED SALES DECLINE
Gap, Inc. continues to see declining sales in the first quarter earnings report, released yesterday, and, as a result, plans to close 75 stores this year.
Gap reported its first quarter fiscal year 2016 diluted earnings per share were $0.32. Total company net sales were $3.44 billion for the first quarter of fiscal year 2016 and comparable sales were down 5 percent.
The company stated that it remains committed to growing its brands in regions where it has a structural advantage and the greatest opportunity to gain market share. As part of this effort, Old Navy will strategically shift its focus to markets most favorable to the brand’s growth, resulting in the closure of its fleet of 53 stores in Japan in fiscal 2016. Old Navy’s near-term growth ambitions will be anchored in North America, including its most recent debut of company-operated stores in Mexico, as well as China and its global franchise operations. Japan remains an important market for Gap Inc.’s portfolio, with a continued strong presence of more than 200 Gap and Banana Republic stores.
Additionally, the company expects to close select Banana Republic stores, primarily internationally, in fiscal year 2016. In total, the company expects to close about 75 stores related to these measures.
Gap says it will take steps to create a more efficient global brand structure, enabling its portfolio of brands to more fully leverage its scale advantage and move even faster in anticipating and responding to the ever-changing environment and needs of customers.
The company estimates that together these measures will result in annualized pre-tax savings of about $275 million and operating margin improvement of nearly 2 percentage points.
“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Art Peck, CEO, Gap Inc. “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”
