- Plans to close all 53 Old Navy stores in Japan
- “Select” number of international Banana Republic stores will shut
- Q1 profits dive 47% as sales slide 6%
Gap has revealed plans to shut a “select” number of Banana Republic stores and is withdrawing its Old Navy fascia from Japan.
The move came as the US fashion giant reported its fifth consecutive quarter of falling sales and profits. In the three months to April 30, profits dived 47% to $127m (£87.2m) as sales slid 6% to $3.44bn (£2.36bn).
Gap said the Banana Republic closures, expected to be about 20, will be “primarily” in its international markets but did not disclose where.
In Japan, it will shutter all of budget chain Old Navy’s 53 stores to “shift its focus to markets most favourable to the brand’s growth”.
Gap chief executive Art Peck said Old Navy’s problems were sparked by “too much fashion, too much duplication in the assortment”.
The retailer said the cost-cutting measures, to complete by the end of the year, would cost about $300m (£206m) and reduce sales by $250m (£171.7m). However, it said the move will save $275m (£188.9m) a year.
It comes after Gap revealed plans last year to close 175 stores in North America and axe 250 head office jobs.
Gap also said it will “streamline” its operating model to “create a more efficient global brand structure”, but did not offer more detail.
In Europe, sales in the quarter fell to $158m (£108.5m) from $181m (£124.3m) the prior year.
Globally, like-for-likes at Gap fascias fell 3%. At Banana Republic like-for-likes slipped 11% and slid 6% at Old Navy.
Gap also gave a cautious view for the rest of the year as it said trends in the “apparel retail environment” need to improve to meet Wall Street expectations.
Last month, Retail Week revealed that Gap’s franchising boss, Stefan Laban, had left as part of the restricting efforts.