Just a day after Victoria’s Secret announced it would be closing more than 50 stores across North America, Gap Inc announced its own major shutterings.
Gap plans to restructure its brand speciality fleet and revitalize brand health, and that includes the closure of approximately 230 Gap specialty stores over the next two years.
The company says it estimates an annualized sales loss of approximately $625 million as a result of these store closures.
Gap also announced plans to separate into two publicly traded companies: Old Navy, and a yet-to-be-named company (“NewCo”), which will consist of the Gap brand, Athleta, Banana Republic, Intermix and Hill City.
- Victoria Secret closing more than 50 stores in North America in 2019
- Payless liquidating $1B worth of inventory in largest sell-off in retail history
- HBC announces closure of all Home Outfitters stores in Canada
“We’re pleased that progress on our productivity goals and operational discipline allowed us to deliver our earnings per share guidance even in the face of macro headwinds and softer trends,” said Art Peck, president and chief executive officer, Gap Inc.
“As we look ahead to 2019 and beyond, we know what we need to do to win and, combined with the separation we announced today, we will be well positioned to leverage the power of our brands and the talented teams that lead them to accelerate the pace of change, improve execution and deliver profitable growth.”
According to the clothing brand, the new spin-off will enable each company to maximize focus and flexibility, align investments and incentives to meet its unique business needs and optimize its cost structure to deliver profitable growth.
“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,” said Robert Fisher, Gap Inc.’s Board Chairman.
“Recognizing that, we determined that pursuing a separation is the most compelling path forward for our brands – creating two separate companies with distinct financial profiles, tailored operating priorities and unique capital allocation strategies, both well positioned to achieve their strategic goals and create significant value for our customers, employees and shareholders.”
NewCo will be based in Gap Inc.’s current headquarters and Old Navy will remain at its current headquarters, both located in San Francisco.
The international brand says it ended fiscal year 2018 with 3,666 store locations in 43 countries, of which 3,194 were company-operated.