Retail group Gap Inc on Thursday said it would shutter 75 stores this year amid sagging sales, including 53 of its kids-focused Old Navy brand outlets in Japan.
Announcing a fall in first-quarter earnings, the San Francisco-based retailer also warned that it might not achieve previous earnings forecasts for this year given the headwinds buffeting the apparel industry.
“Old Navy will strategically shift its focus to markets most favorable to the brand’s growth,” the company said, explaining the Japan closings as Old Navy, its lowest-priced brand, concentrates on the US, Mexican and Chinese markets.
Photo: Bloomberg
However, it said that Japan “remains an important market,” with the continued presence of more than 200 Gap and Banana Republic stores.
The closings, aimed at cutting overall costs, would also include Banana Republic outlets, most of them in international markets, though the locations were not detailed.
Like many of its competitors, the company has been hit by shifting tastes and slower consumer spending worldwide, as well as competition from online fashion retailers.
“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” Gap chief executive Art Peck said. “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”
Gap’s global net sales at US$3.44 billion were down 6 percent in the first quarter, ended April 30, from a year earlier. Sales were off in every region except Asia, where they registered a slight gain. Sales in the US, 77 percent of the total, were also down 6 percent.
Net income came in at US$127 million, or US$0.32 per share, down 47 percent from a year earlier, in line with what the company forecast in a revision early this month.
That helped boost its share price 2.7 percent in after-hours trade to US$17.28.
However, shares remained well below the high this year of just over US$30 a share in March.
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