Due to a decrease in sales and brand reinvigoration, clothing company Gap will shut down 175 stores in North America, about one-fourth of the total number across the region.
Further, the first 140 closures of its underperfroming branches will occur until January 2016, the end of the fiscal year. This will result in eliminating about 250 jobs.
"Some of the stores that we're currently in don't represent the best of our brand," Gap's Global President Jeff Kirwan said in an interview. "We want to make sure we don't have so much of a disparity."
In an era where online shopping has decreased the foot traffic in malls, Gap has been greatly affected in terms of sales.
According to a statement on their website, the company will lose about $300 million in sales annually over the next few years. An estimated $140 million to $160 million is also the expected loss for Gap, which includes employee, leasing and inventory expenses after the shut-downs.
The company also reported it will save an estimated $25 million in early 2016.
This is the second batch of stores closed down by Gap, after shutting out 21% of its stores in North America in 2011.
The company's chief executive officer, Art Peck explained in the released statement that they are working on a marketing strategy as part of a comeback plan. "Obviously over the last four years the customer has continued to embrace digital and mobile. We're always looking at our fleet and the right locations."
Peck added that Gap is "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."
While the company may have not disclosed the number of people who will lose their jobs, but Bill Chandler, Gap's spokesperson pointed out in an email that it will be its corporate priority to transfer affected employees to Gap's sister-brands, Old Navy and Banana Republic, whose stores continue to operate just fine in malls across North America.
