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Gap and Marshalls Owner Eye Real Estate Deals

Kicking off the start of 2023 with store closures or other initiatives are Gap Inc. and Marshalls, the banner owned by The TJX Cos. Inc.

Early in the year is when some retailers disclose store closing plans or other strategic initiatives. That’s because often plans are in the works, but not yet finalized until retailers have a clearer picture on how well holiday sales are trending. Macy’s Inc. in February 2020 disclosed plans to shutter 125 stores, trim headcount and unveil a new three-year strategic plan dubbed Polaris. It also at the time eliminated its Cincinnati headquarters.

Many times, a rethinking of assets or a real estate base is needed if a company is looking to cut costs. Other times, the exit of a store lease or two is part of a routine review of the store network. Abercrombie & Fitch Co. plans to open a total of 60 stores for the current fiscal year ending in January, but the company routinely has about 250 leases up for renewal and could close up to 30 doors depending on results from landlord negotiations.

Gap Inc.

Following the 500 corporate jobs cut in September at its San Francisco headquarters at 2 Folsom St., Gap, which is reeling from the loss of Kayne West’s Yeezy collab, is rethinking its other real estate holdings. The company is trying to sell or lease a 162,000-square-foot building at 1 Harrison St. in San Francisco.

The San Francisco Business Times first reported that Gap filed a zoning verification letter with the city last month asking about possible uses for the building. Gap’s women’s activewear brand Athleta currently uses the space at 1 Harrison St.

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A Gap spokesman confirmed that the building is “on the market,” but declined to provide any other details.

A sale of the 1 Harrison St. building wouldn’t be the first for Gap. Last year it sold a building in San Diego’s Mission Bay that formerly housed Old Navy operations. Gap Inc. also remodeled the headquarters at 2 Folsom St. last year. It consolidated some of its staff from other locations at the revamped HQ. The Folsom site includes workshop areas Gap calls “Co-Lab” spaces. The building also houses four side-by-side stores for Athleta, Banana Republic, The Gap and Old Navy where the company can test new products and shopping experiences.

Gap’s cost-cutting moves follow last year’s lackluster financial performance. The retailer first alluded to cost-cutting moves in its Aug. 26 second-quarter earnings call when it said it would pause hiring and reduce overhead. VF Corp. and Walmart also slashed jobs last year. And beleaguered Bed Bath & Beyond reported plans to cut 20 percent of headcount. And Amazon just said it would cut over 18,000 jobs including actions that started late last year. Fellow tech giant Salesforce also announced that layoffs will affect 10 percent of headcount, or more over 7,000 employees.

The TJX Cos. Inc.

Off-price giant TJX has closed two Marshalls stores in downtown D.C. and Philadelphia.

“Our Marshalls stores located at 1044 Market Street, in Philadelphia, PA, and 529 14th Street Northwest, in Washington, D.C. are expected to close on January 14, 2023,” Andrew Mastrangelo, assistant vice president, global communications, said. “We are always assessing and reviewing our real estate strategies, and our decision to close these stores reflects that thinking.”

TJX, which operates T.J. Maxx, Marshalls, HomeGoods, Sierra and Homesense in the U.S.; Winners, HomeSense and Marshalls in Canada; T.K. Maxx and Homesense in Europe and T.K. Maxx in Australia, said nearly a year ago that it would open 170 new stores in 2022, and is likely to open the same amount this year, if not more. The new store openings are part of a plan to add 1,600 locations over the long term. At the end of last year’s third quarter, it operated 4,736 stores worldwide.