The retailer announced Monday that it plans to shut down 175 North American speciality (i.e., non-outlet) stores in the coming years, with 140 to close before the end of January 2016. An unknown number of European stores will also close. In addition to the many employees who will be laid off at those stores, 250 roles are also being eliminated at the company's headquarters in San Francisco.
The closures will cost the company $300 million in sales losses, and $140 million to $160 million in operational costs. But next year, the closures will start saving Gap $25 million annually — savings it needs after several quarters of declining sales. After the closures, 500 speciality locations will remain, in addition to 300 outlet stores.
Gap has been making some significant changes this year. Just last week the company announced new hires for merchandising and design, replacing the team in place during Creative Director Rebekah Bay's two-year tenure, which ended in January. Gap decided not to fill her role, and Art Peck, who officially became CEO of Gap in February, appointed Wendi Goldman to the role of executive vice president of Gap product design and development that same month. Global President Jeff Kirwan came onboard in December.
By condensing the business and building a strongly integrated merchandising and design team, will 2015 finally be Gap's year for a turnaround? Stay tuned.