Gap Inc. is making bold moves to address declining retail sales in their longstanding stalwart brands, Gap and Banana Republic, announcing Wednesday that they're closing 200 underperforming stores and will then open 270 new locations of the two brands that are doing well for them, Old Navy and Athleta. As Consumerist reports, the company announced the changes at the Goldman Sachs 24th Annual Global Retailing Conference in New York without saying which locations they plan to close, but the company says the store closures should save them $500 million in expenses over the next three years.
The net gain of 70 stores, they say, will help them increase the presence of the two brands that are actually making money for the clothing company: the value-centric Old Navy, which originally emerged as a lower-priced alternative to Gap's mid-priced basics; and Athleta, the newer women's athletic-wear and yoga-wear brand. Old Navy is expected to top $10 billion in sales in the next few years, while Athleta is expected to top $1 billion in sales, as the Associated Press reports.
Gap CEO Art Peck spoke to analysts at the conference Wednesday saying that since 2005, the company has closed 650 Gap stores and decreased its overall retail footprint by 5 million square feet and the moves come as more and more shoppers are buying their clothes online.
"We will leverage our iconic brands and significant scale to deliver growth by shifting to where our customers are shopping online, value and active," Peck said, per Consumerist.
According to CNN Money, Peck attributed some of Gap Inc.'s troubles to "creative missteps." One of those was Gap's egregiously terrible 2014 ad campaign with the tagline "Dress Normal."
A little over a year ago there was speculation about Gap perhaps declaring bankruptcy, and that was following a 2015 announcement of a couple hundred layoffs and the closure of 175 U.S. stores.
At the time, both Gap and Banana Republic were seeing significant declines in sales, and those seem to have continued, though perhaps aren't as bad as they were then in August, the company reported a 1 percent drop in sales at Gap stores, and a 5 percent drop in Banana Republic's sales, and meanwhile Old Navy saw a 5 percent increase.
Previously: Gap Continues To Struggle As Shoppers Reject Their Conformist Message