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Gap to close hundreds of malls in shopping malls "fast and aggressive"



Gap Inc. is considering closing hundreds of its eponymous stores in shopping malls as sales continue to plummet at the Gap brand.

2 months dropped 7 percent, while sales at Old Navy and Banana Republic were positive.

"There are hundreds of other stores that are unlikely to fit our vision of the future of the Gap branded business, be it in terms of profitability, customer experience, traffic trends …" said Chief Executive Officer Art Peck on Tuesday evening during a call with analysts. "The range from the best to the worst deals is extremely wide."

Peck said if the company "addresses" the bottom half of its fleet of gap stores, it could contribute more than $ 100 million to profit. He added that the company wanted to make "urgent" decisions, including the closure of some of Gap's "amazing flagships".

"It will probably cost money to leave many of these businesses, which we will do try to minimize …," Peck told the analysts. "But I intend to quickly end those who do not fit the vision of the future, and I will be thoughtful but aggressive."

The Gap shares had fallen on Wednesday in front of a trading market of just under 1 percent. The stock has already fallen by more than 25 percent this year.

Some analysts hope that Peck and his team are taking the right steps to get the Gap brand back on track, enough not to upset the parent company's other labels.

"We consider the management's opinion that the bottom half of Gap's branch is a specialist is encouraging if done properly," said Oliver Chen, an analyst with Cowen & Co., in a research report. "We believe improving the profitability of the Gap brand is critical to making GPS performance consistent and healthy." However, mall owners will also have to fill more empty store fronts, which are already closed by Sears, Bon-Ton, Claire's, The Children's Place and others.

Many landlords are beginning to consider new uses such as gyms, apartment complexes, and cooperating units for relocation.

Gap has not named the exact locations that should be closed delivering its forecast for the next fiscal year.


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