Dozens of American shopping malls are set to lose out on one of fashion’s household names.
The Gap brand is looking to scale back its presence in the troubled mall and focused instead on off-mall doors, Gap president and CEO Mark Breitbard said Thursday, outlining the San Francisco apparel giant’s restructuring plan during an investor day presentation. Bretibard on Tuesday revealed plans to rework the Gap brand’s Europe strategy, pulling back from company-operated stores to pursue an “asset-light” franchise model instead.
Breitbard said the company will close 175 North American doors by the end of next year, a 35 percent store count reduction. By the end of 2021, 80 percent of Gap’s store fleet will be “outside of malls.”
The apparel brand, like many of its peers, is pinning its hopes on a digital transformation. It sees a $100 billion addressable market in apparel, with opportunities in denim, fleece, active and kids and baby, and plans to grow the $15 million addressable opportunity in adjacent markets, such as teen denim, which launched earlier this year.
Gap is also looking to tighten its point of view by trimming 20 percent for its assortment, which will bolster profitability by focusing on key core products.
In the back half of 2021, Gap plans to pursue more licensing opportunities, which it began earlier this year with Gap Home. And the brand will expand wholesale opportunities to over 50 U.S. military store openings in the second half of 2021, in addition to the forthcoming YZY launch.
The Gap brand posted $4.6 billion in net sales for 2019, has 23 million known active customers and an 80 percent brand awareness in 42 countries.
Meanwhile, Gap Inc.’s Power Plan for 2023 calls for growing Old Navy from $8 billion in annual volume to $10 billion and Athleta from $1 billion to $2 billion, according to Gap Inc. CEO Sonia Syngal. As Gap brand restructures, the Banana Republic assortment is flexing to more upscale lounge and athleisure, with an eye to shifting back to professional attire when customers return to their offices.