Gap announced on Monday that they will be closing a quarter of its stores in North America. That does not include outlets, or specialty stores. For years, the company has been grossly over priced. In addition, Gap struggles to bring new customers “amid competition from fast fashion brands.”
With 175 stores closing, 250 corporate jobs will also be cut as the company tries to regain composure and creep its way back toward growth. Additional store closures in Europe are not known at this time; however, roughly 140 stores will close in the upcoming year. Gap is planning on keeping 500 gap stores and 300 outlet stores.
“We’re focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores.” Gap President Jeff Kirwan said.
Year after year, the store puts out the same basic white-T’s, the classic denims, and lackluster patterns. To keep up with the growing trends and infinite number of online boutiques, Gap will need to continue scaling back its operations, but also boost the quality of their products.
Gap’s spokesman Sean Piazza said the company is still unsure of what locations will be closing. Piazza also declined comment regarding the number of people that will be losing their jobs.
“This came out of an evaluation of the business. It allows the brand to focus on key store locations, drive productivity and also (spend) within our headquarters locations,” Piazza said.
Gap is prepared to lose $300 million in sales, in addition to the one-time costs of $160 million on lease buyouts and inventory writeoffs during the closures. Sales have already been down in the past, falling 10 percent in the first quarter of 2015 with a 5 percent decrease a year-ago.
Creative director Ribekka Bay was let go in January when the company eliminated her position. The company chose to replace the position with a senior design team versus hire another individual.
“Right now they’re basically like a ship without a captain,” said Jessica Bornn, a senior analyst with retail research firm Merchant Forecast. “There’s no major creative design force behind the collection. They haven’t interpreted any of the trends of the season.”
For now the company will preserve the 141,000 full-and part-time employees by increasing pay and putting its focus on the stores that will remain open.