Gap to Close 175 Stores in North America

SAN FRANCISCO, CA - FEBRUARY 20:  Gap employee Shinju Nozawa-Auclair fixes a display of jeans at a Gap store on February 20, 2014 in San Francisco, California.  Gap Inc. announced that they will raise their minimum wage for U.S. employees to nine dollars in June of 2014 and to $10 by June of 2015.  (PHOTO CREDIT: Justin Sullivan/Getty Images)
SAN FRANCISCO, CA – FEBRUARY 20: Gap employee Shinju Nozawa-Auclair fixes a display of jeans at a Gap store on February 20, 2014 in San Francisco, California. Gap Inc. announced that they will raise their minimum wage for U.S. employees to nine dollars in June of 2014 and to $10 by June of 2015. (PHOTO CREDIT: Justin Sullivan/Getty Images)

Gap announced Monday it will close a quarter of its stores and cut 250 corporate jobs as it tries to chart the clothing brand back toward growth.

The company will close 175 stores across North America, not including outlets or factory stores, based on store performance. There will be additional store closures at European locations. About 140 stores will close this year. Gap will continue to operate about 500 Gap stores, plus 300 outlet stores.

Gap has been struggling to entice customers amid competition from fast fashion brands. Same-store sales fell 10% in the first quarter, compared with a 5% drop in the year-ago quarter.

“We’re focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores,” said Jeff Kirwan, global president for Gap, in a statement.

The store closures are part of a larger trend by mall-based brands to reduce store locations, says Simeon Siegel, retail equity analyst at Nomura. Macy’s, J.C. Penney, Deb Shops, RadioShack, Sears and Wet Seal are all among brands that have or are planning to close stores.

“It’s more a continuation of what’s already been going on,” Siegel says. “Your biggest competitor used to be your neighbor in the mall. Right now your biggest competitor is the infinite number of random start-up websites. You just don’t need as many bricks and mortar locations.”

Gap declined to say how many employees will be affected by the store closures. Spokesman Sean Piazza says the company is still defining which locations will close. Piazza also declined to say how many people work at the company’s corporate offices, where 250 jobs will be cut, primarily in New York and San Francisco.

The corporate cuts are about increasing productivity and efficiency in decision making, Piazza says.

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SOURCE: USA Today, Hadley Malcolm

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