Gap just announced it's closing 230 stores and says dozens more are doomed in the next few years
- Gap Inc announced Thursday that it would be closing 230 of its namesake brand's stores and splitting the company in two.
- In an earnings call shortly after, group CEO Art Peck said that the company would close as much as 50% of its specialty fleet in the next few years.
- Specialty stores are defined as any Gap store excluding outlet and factory locations.
Gap is making radical changes.
On Thursday, Gap Inc announced that it would be splitting the company in two and closing 230 of its namesake brand's stores over the next two years.
In an earnings call shortly after, group CEO Art Peck said that the company would close as much as 50% of its specialty fleet in the next few years. Specialty stores are defined as any Gap store excluding its outlet and factory locations.
Peck said most of these closures will occur in the US and will leave the brand with "a smaller, but healthier specialty fleet."
At the start of 2018, there were 725 global specialty stores, excluding China, CFO Teri List-Stoll said Thursday. "Between the 68 specialty stores that we closed this year and the 230 additional specialty closures that we announced today, this represents closure of nearly half the fleet and there will be additional natural expirations and closures beyond 2020," she said.
This means we could see more than 60 more stores shutter in the next few years. A spokesperson for Gap confirmed this information to Business Insider.
The Gap brand has struggled in recent years - same-store sales were down 5% in the fourth quarter of 2018 and overall for the year.
The company has increasingly leaned on heavy discounting to clear inventory, which not only erodes profit margins but also damages the brand image.
Peck is determined to make the necessary strides to fix the business.
"We have our work cut out for us this we acknowledge," he said Thursday. "But we know what we need to do to win. And we are committed to restructuring the fleet and revitalizing Gap brand to unlock shareholder value and drive profitable growth."