It appears Gap will be retrenching…
Gap Inc. GPS 0.09% plans to shut more than a fifth of its Gap stores in North America over the next two years, a comedown for the struggling retailer and a stark symbol of the way the tepid recovery and rise of online shopping have altered the landscape at shopping malls.
Once the world’s largest specialty apparel chain by revenue, Gap pioneered the strategy of developing a popular store and expanding it to every viable shopping location in the U.S.—then beginning the process all over again with a new brand.
But that approach, which produced heady growth as Gap and other retailers raced to build a coast-to-coast presence, came back to haunt it after the recession exposed an oversaturated market, with far more stores than shoppers to fill them.
Acknowledging that mismatch, Gap, which also owns the Old Navy and Banana Republic chains, said Thursday it will shrink its network of Gap stores in North America to 700 by the end of 2013, down 189, or 21%, from the 889 stores open at the end of June. The company has been paring back its North American store count over the past few years, but hadn’t previously disclosed it planned such deep cuts so quickly.
In 4 p.m. composite trading Thursday on the New York Stock Exchange, Gap shares were up seven cents at $17.92
Gap will let existing leases expire, rather than terminate them early, a spokeswoman said. She wouldn’t say where the closures would take place, but the company said they will be aimed at clearing out stores that have become tired or worn out. The pullback will empty two million square feet of retail space, creating a fresh headache for U.S. mall landlords, who are already struggling with record vacancies.