Gap to cut 175 North Amer­i­can stores, 250 HQ jobs

The China Post - - BUSINESS INDEX & -

Gap an­nounced Mon­day it will close 175 name­sake stores in North Amer­ica and elim­i­nate 250 head­quar­ters jobs as it re­sponds to lower in-store sales with the rise of online shop­ping.

The youth-ori­ented ap­parel re­tailer said the ma­jor­ity of store clo­sures would take place this year. Af­ter the clo­sures, Gap will have about 500 spe­cialty stores in North Amer­ica and 300 out­let stores.

Gap Inc. chief ex­ec­u­tive Art Peck, who was pro­moted in Fe­bru­ary af­ter lead­ing Gap’s growth, in­no­va­tion and dig­i­tal busi­ness, said a smaller mod­icum of phys­i­cal stores was needed given shift­ing cus­tomer tastes.

“Cus­tomers are rapidly chang­ing how they shop to­day, and these moves will help get Gap back to where we know it de­serves to be in the eyes of con­sumer,” Peck said.

A com­pany news re­lease did not say how many store jobs would be af­fected by the clo­sures, in ad­di­tion to those in the com­pany’s San Fran­cisco head­quar­ters.

“These de­ci­sions are very dif­fi­cult, know­ing they will af­fect a num­ber of our val­ued em­ploy­ees, but we are con­fi­dent they are nec­es­sary to help cre­ate a win­ning fu­ture for our em­ploy­ees, our cus­tomers and our share­hold­ers,” said Jeff Kir­win, global pres­i­dent for the Gap brand.

Gap ex­pects a one-time charge as­so­ci­ated with sev­er­ance pay, in­ven­tory write-offs and lease can­cel­la­tions of US$140-160 mil­lion. An­nual sav­ings of US$25 mil­lion are ex­pected to be­gin in 2016.

Mon­day’s news re­lease did not men­tion Gap’s other two chains, Banana Re­pub­lic, which has also strug­gled with lower sales, and Old Navy, which has seen sales rise of late.

Gap shares rose 0.3 per­cent in af­ter-hours trade to US$38.30.

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