Gap To Close Stores,Cut Jobs In Hopes For A Turnaround

All American brand Gap Inc, announced plans to shut nearly a fifth of its namesake stores (175 of its 675 Gap stores) in the US, as the company struggles with a slump in sales. In addition it would also be shutting a "limited number" of its European stores.

The retailer also announced that it plans to cut about 250 corporate jobs at its headquarters in San Francisco and in New York and other locations nationwide. It currently employs around 141,000 staff in about 3,700 company-owned and franchise stores worldwide. However, the company refused to reveal how many employees would be laid off as a result of the store closures but said it would help displaced employees find positions at nearby locations.

Gap was the original normcore retailer having dominated khaki and denim culture through the 1990s. Over recent years it has fallen on difficult times following the departure of former creative director Patrick Robinson in May 2011. In 2012 it hired Rebekka Bay, a Danish fashion designer but her stint was short lived with the company ending up eliminating the position of creative director altogether.

Sales at existing Gap stores fell 10% in the three months to May 2, after falling 5% in the year-earlier quarter. The company's shares are down about 9% so far this year. The company is expected to save around $25m a year through the store closings and job cuts.

"Returning Gap brand to growth has been the top priority since my appointment four months ago - and Jeff and his team bring a sense of urgency to this work," Art Peck, Gap's CEO, told WWD of Jeff Kirwan, global president for the Gap brand. "Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be."

"These decisions are very difficult, knowing they will affect a number of our valued employees, but we are confident they are necessary to help create a winning future for our employees, our customers and our shareholders," Kirwan added.