Gap Inc., which has struggled for several years, plans to close 350 mostly mall-based stores in North America by the end of 2023 and will focus more on off-mall locations and digital sales.
The company, which laid out its new strategy at an investor meeting this week, is really leaning into trends that have been accelerated during the pandemic: increasing digital sales, the move away from shopping malls, the casualization of America, and the rise of fitness.
The store closures will come from the Gap and Banana Republic chains. The Gap chain has been unprofitable for several years, and Banana Republic specializes in work clothes.
After the store closures, 80% of the Gap Inc.’s store fleet will be in off-mall locations.
However, Gap Inc. will expand the store base for Old Navy and Athleta. By 2023, the higher margin Old Navy and Athleta banners are expected to account for 70% of total sales.
With the active-focused Athleta, the company plans to double sales to $2 billion by the end of 2023.
After the store closures, 80% of the Gap Inc.’s store fleet will be in off-mall locations.
The company will also concentrate on doubling its current online penetration to 50% of total sales. Thus far, the chain with the largest online penetration is Athleta, which generated 44% of its sales online in 2019. The Gap reached 25%, Banana Republic 24%, and Old Navy, 23%.
Gap Inc. will also look to transition to a franchise store model in Europe instead of the current company-owned system.
