Gap has announced some serious cuts to improve its overall performance. The US company plans to size down its store fleet and cut its headquarter workforce.

Gap plans to close about 175 specialty stores in North America over the next few years, with about 140 closures happening in fiscal 2015. Gap Outlet and Factory stores will not be affected. A number of European stores will also be closed during this period.
After the closing measures, Gap wants to reach a number of ca. 800 Gap stores in North America (500 Gap specialty locations plus 300 outlet stores) and a global presence of ca. 1,600 company-operated and franchise stores in 50 countries.

Moreover, the brand’s headquarter workforce, primarily in North America, will be reduced by approximately 250 roles during fiscal 2015.

“We’re focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores”, said Jeff Kirwan, Gap’s new global president since December 2014. Since his appointment, Kirwan has rebuilt the leadership and implemented an aggressive agenda designed to strengthen the brand and successfully compete on the global stage.
The company estimates an annualized sales loss of approximately $300 million associated with the store closures. Additionally, the company estimates one-time costs primarily associated with this to range between $140 to $160 million (caused by lease buyouts, asset impairments related to the Gap fleet, inventory and fabric write-offs, and employee related costs).
Gap estimates annualized savings from these actions to be approximately $25 million, beginning in 2016.

Art Peck, chief executive officer, Gap Inc.
Art Peck, chief executive officer, Gap Inc.
In a detailed corporate statement Gap’s mothership Gap Inc. (Gap, Banana Republic, Old Navy etc), Art Peck, who helms Gap Inc. as chief executive officer since February 2015, explained that the corporation wants to put the Gap brand back to growth by building upon the strength of the well-performing Old Navy brand. “Led by Old Navy’s proven success growing top-line sales by nearly 1 billion over the last three fiscal years, Gap Inc.’s portfolio of brands will leverage its transformed product operating model […] to more consistently deliver on-trend product collections that customers love.”
Next to a more trend-driven design, Gap Inc. wants to focus stronger on providing a seamless shopping experience across all channels (“Gap Inc will highlight its plans for new digital capabilities as well as mobile and personalization initiatives”) and pursuit global growth opportunities, most notably in China, where sales have grown to nearly 500 million in four years and Gap e-commerce sales expanded by about 60 percent between 2013-2014.