Gap is closing 75 stores outside North America
Gap said it is shuttering 75 Old Navy and Banana Republic stores outside North America as the struggling company looks to focus on regions where it sees it has the greatest potential for success.
The closures include 53 Old Navy stores in Japan, Gap said.
The closures represent just a fraction of the over 3,700 stores it operates globally. But the San Francisco-based retailer says it should save it about $275 million a year before taxes.
The announcement comes as Gap reported a 47 percent drop in first-quarter profits, with revenue falling nearly 6 percent.
All three brands — Gap, Old Navy and Banana Republic — suffered declines for a key sales measure.
Gap has long been struggling, unable to get shoppers to buy its clothes without offering big discounts. CEO Art Peck, who came to the helm in February 2015, has been trying to overhaul the business.
Peck promised investors that Gap would see business perk up this spring, but that has not materialized. In fact, in April, it warned analysts that it had entered the month with more inventory than planned because of weaker-than-expected traffic starting in late March.
Even Old Navy, which had long been a bright spot in the company, has seen sales declines recently.
“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Peck in a statement.
For the recent quarter, Gap said that net income was $127 million, or 32 cents per share. That compares with $239 million, or 56 cents per share, in the year-ago period. Revenue fell to $3.44 billion, from $3.66 billion in the year-ago period.
Analysts had expected 32 cents on revenue of $3.44 billion, according to FactSet. Gap had cut its firstquarter earnings guidance in early May. And the company said Thursday it would not reaffirm its earnings guidance for the fiscal year.
Gap’s revenue at stores opened at least a year dropped 5 percent.
By brand, the Gap brand saw sales fall 3 percent, while that figure was down 11 percent for Banana Republic. At Old Navy, the figure was down 6 percent.
The stock has tumbled about 55 percent in the past year, through the end of Thursday’s regular-session trading.