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Gap Mulls Store Closures in Europe

Gap Inc. is looking to lighten its asset load across the pond, with store closures very much on the table.

In a statement Tuesday, Mark Breitbard, head of Gap brand global, said the American clothing giant wants to “amplify” its “global reach” but do so in “asset-light ways,” suggesting the San Francisco firm will pull back its brick-and-mortar presence in Europe. A strategic review of operations on the continent puts Gap-operated stores in the United Kingdom, France, Ireland and Italy at risk of closure by the end of 2021’s second quarter. Plus, “a possible outcome is the closure of our EU distribution center in Rugby,” Breitbard said, noting that Gap and Banana Republic e-commerce distribution is also under review.

Gap Inc. might also tap third-party players to expand its business model.

“Franchise partnerships are a strong and cost-effective way to amplify the brand. Through franchise, Gap brand reaches customers in 35 countries with more than 400 stores and 14 e-commerce sites,” Breitbard said. “We are committed to sharing more as we thoughtfully work through this process. While the work is tough, we have our eyes set on leveraging our brand power to deliver Modern American Optimism to customers around the world.”

Gap previously said in August that as part of its global restructuring, it would close more than 225 unprofitable Gap and Banana Republic doors—net of new store openings—in 2020. That number of locations is almost three times more than the 90 stores announced earlier this year, and more than the 115 initially planned for this year. Gap in February of last year said it would close 230 Gap stores over a two-year period, with about half of the closures occurring each year. It also warned in August that more stores would be on the chopping block in 2021.

Some of the stores slated to be shuttered already have been closed, with many located in the hard-hit shopping mall sector. The company, similar to what competitors have noted, has seen the coronavirus pandemic nudge an influx of shoppers away from stores and onto the web.

Net sales for the second quarter ended Aug. 1 were down 18 percent from the same year-ago period to $3.28 billion, reflecting a 95 percent increase in online sales, offset by a 48 percent decline in store sales during temporary Covid-19 closures. More than 3.5 million new customers shopped Gap Inc.’s e-commerce channels during the quarter.