Gap Announces More Store Closures

GAP has revealed falling profit margins, with a 46.8 per cent decline in net income in the first quarter (ended April 30). It has also announced plans to shutter another 75 stores, including all Old Navy stores in Japan in a bid to get growth back on track.

"We had never expected positive traffic, but we didn't expect deeply negative traffic," Gap chief financial officer Sabrina Simmons toldWWD.

Individually, Gap sales fell three per cent, Old Navy declined by six per cent, and Banana Republic dropped 11 per cent. Art Peck, Gap's chief executive officer, discussed the difficulties at Old Navy, saying there was too much fashion and too much repetition on particular styles. He identified positive results at Banana Republic since the brand cut back on discounting in a bid to train customers not to wait for promotions.

The success story for the group has been the US-based athleisure label, Athleta. "That business is highest growing," said Peck. "It will be a very significant segment of the overall rated apparel space as we go forward and we plan on it being here to stay."

The news of these closures follows the announcement last June that Gap would close 175 stores in the US, along with a "limited number" of its European stores.