Japanese shoppers don’t hold much promise for one of Gap Inc.’s properties.
The San Francisco-based retailer said it would shutter its fleet of 53 Old Navy stores in Japan in fiscal 2016 as it shifts its focus to markets most favorable to the brand’s growth. According to a press release Thursday, those regions are North America and Mexico, as well as China and its global franchise operations. Some Banana Republic stores, primarily overseas, will close their doors this fiscal, too.
The company said the move will result in the closure of about 75 stores total.
“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,” Art Peck, chief executive officer, stated. “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.”
The announcement followed Gap’s fifth straight quarter of falling revenue and profit, as all three brands suffered declines. Total company net sales were $3.44 billion in the three months ended Apr. 30, down from $3.66 billion in the same period in fiscal 2015, while sales at stores open more than a year dropped 5 percent. Diluted earnings per share were $0.32.
The company said Japan is still an important market for its portfolio, noting that its 200-plus Gap and Banana Republic stores there will remain open.
Peck hinted at changes to come earlier this week at the shareholders annual meeting, declaring that the company needs to “distort” its energy “toward places that we know we can win.”
“If you look at our stores, even for what has been for the industry a Q1 of disappointing traffic in places—and almost unexplainable traffic patterns—we have stores that are positive comping; many of them,” he said. “But not enough, and not consistently enough, to drive the results that we know we can achieve.”
He also said he would consider selling Gap’s brands on a third-party e-commerce site, such as Amazon, pointing out that e-tailers that aggregate many vendors together have a “strong, almost dominant presence” in some parts of the world.
“I think we need to not be encumbered by the past, and make sure that we are going to where our customer is and being there every single day,” he said.
Shares (GPS) rose 0.5% in after-hours trading Thursday.