The company estimates an annualised sales loss of approximately $625m (£471m) as a result of these closures. Additionally, the company estimates pre-tax costs associated with these actions to be about $250m (£188m) to $300m (£226m), with the majority expected to be cash expenditures.
The group said the remaining stores will serve as a “more appropriate foundation” for future growth of the brand across its specialty, outlet and online channels. It added there will be a “healthier channel” mix after the restructuring, with nearly 40% of sales coming from online.
A statement from the retailer read: “While stores are an important part of the customer journey, the company is actively working on multiple initiatives to revitalise the Gap brandby re-engaging with customers and expanding its loyal customer base, leveraging the multigenerational, democratic appeal of the brand.”
Gap has also announced plans to create two independent publicly traded companies: Old Navy, which focuses on family apparel, and a yet-to-be named company, which will consist of the Gap brand, Athleta, Banana Republic, Intermix and Hill City.
According to the group the spin-off will enable each company to “maximise focus” and flexibility, align investments and incentives to meet its “unique business needs and optimise its cost structure to deliver profitable growth”.
Robert Fisher, board chairman, said: “Following a comprehensive review by the Gap Inc. Board of Directors, it’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time, and each company now requires a different strategy to thrive moving forward.”