Gap Inc. will close roughly 200 poorly performing Gap and Banana Republic stores in the next three years, the clothing company announced Wednesday.
The move is part of the retailer’s plan to zero in on its brands that are showing the most promise, while paring back those that are struggling in order to boost growth.
“Over the past two years, we’ve made significant progress evolving how we operate,’’ Gap Inc.’s CEO and president, Art Peck, said in a statement. “With much of this foundation in place, we’re now shifting our focus to growth.’’
While it sheds dozens of Gap and Banana Republic locations, the company will open roughly 270 new Old Navy and Athleta stores. Gap Inc. forecasts that Old Navy sales will surpass $10 billion, and Athleta will top $1 billion in the next few years.
In the wake of the news, shares jumped 6.41% to $25.57 in mid-day trading.
Gap Inc's sales at stores open at least a year, a common industry measure of performance, were up 1% in the second quarter. But that success was largely driven by Old Navy, whose sales rose 5%, vs. a 1% drop by Gap and a 5% dip by Banana Republic.
Store closures have become familiar throughout the retail sector, as traditional store chains struggle to attract foot traffic with a growing number of consumers choosing to shop online. Last month, Sears Holdings added another 28 Kmart locations to its list of 330 Sears and Kmart stores that it has already shuttered or plans to close by the end of this year.
J.C. Penney and Macy's have also said they would shutter dozens of locations, and specialty clothing chains like Bebe, The Limited and Rue 21 have closed or intend to shut down all of their brick and mortar storefronts.
Gap Inc., like other traditional chains, is also bolstering its online presence. Ultimately, the company says that steps to make the company more nimble should help it to cut roughly $500 million in costs in the next three years.