Gap to close 100 U.S. stores; focus on marketing and opening international stores
Gap Inc. announced plans to close 100 stores in 2009. Most of them will be Gap stores, representing a 2 percent reduction of the retailer’s overall square footage, executives said on the chain’s fourth-quarter earnings call. The firm will try to combine GapKids and GapBaby stores with traditional Gap stores and will attempt to downsize several Old Navy stores. But the company also plans to open about 25 international Gap stores and 25 outlet stores. Many of the new outlet stores will be in Canada and Japan, while new Gap and Banana Republic stores will open in the U.K., Ireland, France and Japan. Gap will also continue to franchise stores in emerging markets.
Net sales for the quarter were $4.08 billion, down 13 percent versus last year. Total company comp store sales were down 14 percent in the quarter. But CEO Glenn Murphy pointed out the company has about $2 billion in cash on hand. Murphy added that Gap’s biggest challenge in the coming year will be drawing more traffic into its stores. “Traffic or lack thereof has been the Achilles’ heel of the company for a number of years,” he said. “You’re going to see us really get a very deep focus on how we use our stores and through product and through marketing.” Murphy said the company will redirect its marketing dollars away from promoting specific products on billboards and in magazine ads and more toward other “brand building” initiatives he said are more likely to spur permanent traffic upticks.