Gap Inc has announced that it is to close around 175 specialty stores in North America over the next few years, with 140 taking place this year and it is to maintain its global presence in 50-plus countries with its 1,600 company-operated and franchise locations.

 

The announcement this week follows net sales results for May which were down by one per cent to $1.25bn for the four-week period ended May 30, 2015, compared with net sales of $1.27bn for the four-week period ended May 31, 2014. [Gap’s fiscal year 2014 net sales were $16.4bn-Ed].

 

The company’s Gap Global sales were also down 6% versus a 3% fall last year, while its Banana Republic Global sales fell 5% compared to a positive 3% in 2014. By contrast, Old Navy Global was up by 6% versus a 2% rise last year.

 

Gap has enjoyed a good presence in the duty free business over many years and only recently Dufry opened Spain’s first near-300sq m GAP store at Málaga Costa del Sol Airport and the world’s largest located at any airport.

 

Dufry is now planning to open another four under its agreement with Aeropuertos Españoles y Navegación Aérea (AENA) at the Spanish airports of Ibiza, Gran Canaria, Tenerife Norte and Tenerife Sur.

 

TRAVEL RETAIL PRESENCE UNAFFECTED

At the January opening, Stefan Laban from Gap International described the relationship as ‘a terrific next step in our global expansion plans’. [Click here: http://www.trbusiness.com/regional-news/europe/dufry-opens-gap-at-malaga-airport/71362].

 

While the niche travel retail business appears to be unaffected by the new slimming programme, Art Peck, Gap Inc. CEO said the decision to reduce the company’s store numbers is in line with changing customer shopping preferences and his ‘top priority’ of returning the Gap brand to growth.

 

“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” said Peck.

 

These changes will not impact Gap Outlet and Gap Factory Stores. In parallel with these moves, the brand will close a limited number of European stores during this period.

 

This new initiative will result in the reduction of the brand’s workforce primarily in North America, with the loss of approximately 250 jobs during fiscal year 2015. The company is estimating an annualized sales loss of approximately $300m associated with these store closures, but is forecasting annual savings from these actions of approximately $25m – beginning in 2016.