The past eight months of the COVID pandemic have brought new hardships and challenges at every turn. In addition to the lives the virus has claimed, it’s also killed many industries—and retail businesses have been hit particularly hard. Companies nationwide have had to dig deep to find ways to stay afloat, and now one beloved ’90s store is the latest victim of the many retail closures and restructurings that have been announced amid the pandemic. Gap Inc. recently revealed that it will be closing most of its mall locations in the next few years, and that includes shutting down 130 Banana Republic stores in North America. Read on to find out more about Banana Republic and Gap, and for more retail news you may have missed, find out which Beloved Store From Your Childhood Is Closing 200 Locations.
Banana Republic has become one of the weakest of Gap Inc.’s brands
Banana Republic only accounted for 15 percent of the company’s net sales in the 2019 fiscal year, Mark Breitbard, the president of Gap Global, said during a virtual meeting with investors on Oct. 22. For comparison, Gap stores accounted for 28 percent and Old Navy stores accounted for 49 percent.
Gap Inc. plans to close most of its mall stores by 2023.
Breitbard announced that Gap Inc. would be closing one-third of its namesake Gap stores (22o stores) in North America by the end of 2023. The company plans to close mostly mall-based stores, leaving only 20 percent of its remaining Gap stores in shopping malls.
“We’re shrinking North American specialty stores and getting out of mall-based locations,” Breitbard said on the call. “What we’re doing is restructuring the fleet, shifting and pushing more of the business to digital and growing (market) share in key categories.”
While Banana Republics and Gaps are closing, more Old Navy stores will be opening up.
As the company’s biggest brand, Old Navy is actually getting a boost as a result of the company’s restructuring. There are currently already about 1,200 Old Navy stores worldwide, and Gap Inc. plans to open 30 to 40 more in the next three years. In fact, the company projects that the brand will increase revenue from $8 billion to $10 billion by the end of 2023.
But Gap Inc. has another money problem on its hands.
Breitbard said the company has been “overly reliant on low productivity, high rent stores” and the last six months of the pandemic has helped address Gap Inc.’s “real estate issues and accelerate [its] shift.”
In fact, the company is currently involved in a legal dispute with Simon Property Group, a major mall operator, over rent charges during the nationwide shutdowns. In April, the retail company—which reportedly pays $115 million in monthly rent for its North American stores—announced that it would be not be making rent payments while stores were locked in mandatory closures. According to the lawsuit by the Simon Property Group, it appears the retailer has continued to withhold rent payments.