Gap Turnaround Plan Includes Closing 175 Underperforming Stores
By Christine Kern, contributing writer
Plan includes fleet optimization and reduction of headquarter workforce.
Gap Inc. has announced a series of strategic initiatives designed to reinvigorate the brand, including closing 175 underperforming North American Gap brand stores in an effort to contain costs and refocus; 140 will close this fiscal year.
The company estimates annualized savings from these actions to be approximately $25 million, beginning in 2016.
Other actions include engaging in fleet optimization to better reflect how customers shop, and the reduction of headquarter workforce to speed the decision-making process.
Gap Inc. itself will also shed 250 corporate jobs, mostly at its headquarters in San Francisco.
“Returning Gap brand to growth has been the top priority since my appointment four months ago – and Jeff and his team bring a sense of urgency to this work,” Art Peck, Gap Inc. chief executive officer, explained in a company statement. “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 consumers.”
Once the stores close, the brand will be left with 500 full-price stores and 300 Gap Factory Outlet stores in North America. Gap is also closing a handful of European stores as part of the plan as well.
“Our customers and employees want Gap to win,” said Jeff Kirwan, global president for Gap. “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."
Regarding the decision to downsize the corporate workforce, Kirwin stated, “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.”
Kirwin took the reins as CEO after Glenn Murphy stepped down. Since Kirwan assumed leadership, he’s rebuilt the leadership team and implemented an aggressive agenda designed to strengthen the brand and successfully compete on the global stage. Kirwin’s vision includes driving towards a clear, on-brand product aesthetic framework focused on optimistic and elevated American style, and rebuilding the brand’s product operating model to increase speed, predictability and responsiveness, and enable greater competitiveness.