It feels like there's news of another store closure every day—and no retailer, big or small, is immune. Walmart recently confirmed it's closing stores across the country throughout the month of March, and Best Buy just closed 17 locations last week, with dozens more closures on the way. Gap Inc., which owns the Gap, Athleta, Old Navy, and Banana Republic, is just the latest retailer to announce that it's reducing its retail footprint. According to a recent earnings report, over 50 Gap and Banana Republic stores are on the chopping block this year. Read on to find out more about these upcoming closures.
READ THIS NEXT: Bath & Body Works Is Closing About 50 Stores This Year.
The company is cutting back on brick-and-mortar stores.
iStockDuring a March 9 earnings call, Katrina O'Connell, chief financial officer for Gap Inc., confirmed that the company is closing "50 to 55 Gap and Banana Republic stores" in North America this year.
O'Connell didn't provide additional details on exactly when and where these stores are closing.
Best Life reached out to Gap Inc. for more information on the closures, but has not yet heard back.
Hundreds of stores have departed since 2020.
Cameron Ballantyne-Smith / ShuttersetockO'Connell noted that these closures are part of a larger initiative. "We remain on track to achieve our goal of closing 350 non-strategic Gap and Banana Republic stores in North America by the end of 2023 and ended fiscal [year] 2022 having achieved close to 90 percent of that goal," she said.
The company has a page on its website dedicated to its "North America store fleet transformation," explaining that Gap Inc. is "thoughtfully looking" at its real estate portfolio to identify closing stores. The retailer first announced plans to close approximately 350 stores in Oct. 2020, keeping in line "with the goal of having a smaller and healthier fleet of stores."
According to a slideshow prepared for the earnings call, at the end of 2022, there were 912 total Banana Republic and Gap stores in North America, a sharp decrease from the 1,216 open in 2019 and 1,027 open in 2020.
Some stores have already closed this year. In January, Banana Republic locations shut down in Harrisburg, Pennsylvania; Stamford, Connecticut; and Kentwood, Michigan. Meanwhile, Old Navy stores in Chicago, and Solon, Ohio, were also axed at the beginning of the year.
Gap Inc. had a "challenging year."
The Image Party / ShutterstockThe closures follow what Gap Inc. called "a challenging year." During the last quarter, sales at all four clothing brands were down, and overall in-store sales were down 5 percent, O'Connell said. Net income losses for the quarter totaled a whopping $273 million, up considerably from $16 million reported the year prior, per The Wall Street Journal.
In light of this, the retailer is looking to cut $300 million in costs, primarily by letting those in management positions go. The chief growth officer role held by Asheesh Saksena has already been eliminated, and Athleta's president Mary Beth Laughton left yesterday, March 9.
The company also has leftover inventory at Old Navy—according to the WSJ mostly of the surplus resulted from a failed initiative to make clothing sizes for all shoppers. Company sales were also affected by the end of a partnership between Gap and controversial rapper Kanye West. As a result of the terminated contract, Gap Inc. lost roughly $16 million, per the WSJ.
Gap Inc. executives expect net sales to continue on a downward trend in 2023. During the earnings call, O'Connell said the company is taking a "prudent approach to managing our business in light of the continued uncertain consumer and macro environment."
It's not all bad news.
ShutterstockThe company's financial situation may seem grim, but there's still some hope for loyal customers. According to O'Connell, two Gap Inc. brands will soon have more brick-and-mortar stores to shop at.
While the CFO conceded that there will be "fewer store openings," she added that the company is "planning to open 30 to 35 Old Navy and Athleta stores in total" this year. As with the closing stores, O'Connell didn't include details about when or where new locations will be opening.
