The largest American fashion retailer Gap has decided to carry out another large-scale reduction in retail chains. According to the company’s press service, 225 Gap and Banana Republic stores will close around the world by the end of 2020, and in 2021 more closures are expected.
As of August 1, 2020, the global network managed by Gap Inc. included more than 3,800 stores under names Banana Republic, Old Navy, Athleta, Janie, and Jack. Of those, 1643 stores accounted for two key chains of retailers, writes Business Insider.
The company promised to present a more detailed plan to close stores at a meeting with investors on October 22, 2020. It is known that a significant part of the closure will be for stores located in shopping and entertainment centers.
Over the past few years, Gap has already closed several hundred stores. In particular, in early 2019, it was announced plans to reduce 230 outlets within two years. Still, the goal was adjusted upward due to the critical situation in the market against the background of a problematic epidemiological situation.
The number of Gap and Banana Republic locations have been declining. In 2018, the brands had1,843 stores globally; now there are 1,643. That number will once again decrease once again in 2021.
Like many retailers, Gap had a brutal second quarter, which encompassed pandemic-induced temporary location closures. Total sales across its major brands — Gap, Old Navy, Athleta and Banana Republic — declined 18%. However, some of those losses were offset by a 95% increase in online sales.
Another bright spot that would’ve been unheard of a year ago were sales of face masks. Gap said it sold $130 million worth of face coverings in the second quarter.
Tracking global performance by brand, Old Navy net sales were down 5%, reflecting an increase in online sales of 136%, offset by a 36% decline in store sales. Comparable sales were up 24%. Gap net sales were down 28% reflecting an increase in online sales of 75%, offset by a 55% decline in store sales. Comparable sales were up 12%. Banana Republic net sales were down 52% reflecting an increase in online sales of 26%, offset by a 71% decline in store sales. Comparable sales were down 27%. Athleta net sales were up 6%, reflecting an increase in online sales of 74%, partially offset by a 45% decline in store sales. Comparable sales were up 19%.
“Our strong financial position, healthy cash flow generation and our continued execution of initiatives to drive profitable growth provide the foundation to emerge from the crisis well-positioned to compete in a rapidly evolving marketplace,” said Katrina O’Connell, CFO, Gap Inc. “Recognizing the uncertainty ahead, we remain committed to amplifying our distinct advantages and leveraging our scale to capture share as demand recovers.”