Gap Mulls Closing Hundreds of Mall-Based Stores

Gap Inc. is considering shutting hundreds of its namesake stores at shopping malls as sales at the Gap brand continue to slide. The retailer said Tuesday evening that it still has 775 Gap-branded stores globally, in addition to those under the Old Navy, Banana Republic and Athleta banners. Gap Inc. has more than 3,000 stores around the world. The namesake brand, however, has been the weakest unit of the company of late. In the third quarter, sales at Gap stores open for at least 12 months fell 7 percent, while those at Old Navy and Banana Republic were positive. CEO Art Peck said that should the company "address" the bottom half of its fleet of Gap stores, it could contribute more than $100 million to earnings. He added the company is looking to make decisions about shutting stores "with urgency."

Total Retail's Take: While a difficult path to choose considering the jobs at stake, closing underperforming stores is a necessary step for many traditional brick-and-mortar retailers that find themselves with a glut of expensive storefronts that aren't covering their costs. Such is the case for Gap, Inc., and in particular the company's namesake stores. Rightsizing the company's store count by shuttering its mall-based locations — the struggles of shopping malls have been well documented — is a logical step in returning the company back to profitability. Furthermore, the move would help to build upon the growth of Gap, Inc.'s other brands, particularly Old Navy. I would expect us to see liquidation sales at many Gap stores early in 2019.