Black Friday 2018 could be the last one for hundreds of Gap stores at malls around the country.
Art Peck, CEO of Gap Inc., says the retailer is considering the shutdown of hundreds of underperforming stores “with urgency”. Included among those are some of Gap’s “flagship” locations.
“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,” Peck said in an earnings call Tuesday. “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.”
Gap Inc.’s third-quarter results were in line with analyst expectations in the third quarter, but Gap store sales underwhelmed, as they have regularly for some time. (Other brands owned by the company made up the deficit.) Peck said the drag of real estate obligations is one of the biggest encumbrances on the Gap brand right now. The chain currently has 775 Gap stores.
“Addressing the bottom half of the fleet represents over $100 million of earnings contribution opportunity and it is that portion of the fleet that is dragging down the brand,” he said. “This is the piece of the business that we are firmly committed to addressing with urgency.”
Neither Peck nor Gap announced specific locations that are being targeted for closure, however. Those are expected to be revealed when the company provides the forecast for its next fiscal year. The closures will follow the shutdown of 200 Gap and Banana Republic stores in 2017.
The Gap might be the namesake of the company, but these days, the earnings come more from its more than 2,000 Old Navy, Banana Republic, and Athleta stores.