Gap Inc. issued a press release this morning trumpeting all sorts of exciting news - an increase in sales outside North America, the opening of many more stores in China, and a new marketing campaign for its Banana Republic chain. Then, at the bottom of page 2 was one of those "by the way..." mentions. (Bold face is mine):
Improving productivity of North American real estate: The company is making progress on its goal of reducing square footage in North America and is on track to achieve a 10 percent reduction in overall store square footage by fiscal year 2012, when compared to 2007. At Gap, the company is committed to rebalancing its specialty and outlet stores within North America, resulting in about 700 Gap specialty stores and about 250 Gap Outlet stores by year end 2013. This represents a 34 percent decrease in the Gap specialty store fleet when compared to the end of 2007. At Old Navy, the brand's strategy is to have roughly the same number of stores in North America with a smaller footprint. The brand plans to continue downsizing its fleet in North America, and expects to potentially remove another 1 million square feet by fiscal year end 2013.
Improving productivity of North American real estate? Rebalancing? Well, that really narrows it down. The closures have been in the works for some months, but it's still pretty big news for a retailer that at one time revolutionized the casual-urban look - and then cleverly marketed the Gap image (much of that the result of former CEO Mickey Drexler). The plan is to have 700 U.S. stores by the end of 2013 (no specific locations were announced). That would mean shuttering 300 or so stores from its peak in late 2007.
*Some clarification on store count from the WSJ:
Gap plans to reduce its North American store count to 700 by year-end 2013, down from 889 now, excluding outlet stores. It has been decreasing its North American store count over the past few years, but hadn't disclosed the exact percentage it would cut in the next two years until Thursday. Gap continues to struggle with its domestic business in the U.S. Gap's profit fell 19% in its most recent quarter. In North America, sales at namesake and Banana Republic stores fell 3% and 2%, respectively, while Old Navy same-store sales were flat.