Gap moves to streamline; closing Old Navy in Japan

Moving forward with its promise to streamline its business model, Gap Inc. said it plans to close its fleet of 53 Old Navy stores in Japan and also shutter some Banana Republic stores, primarily outside of North America.



The retailer announced the moves on Thursday in its first quarter results, which marked the chain's fifth straight quarter of lower revenue and profit. The company also said it would not reaffirm its earnings guidance for the fiscal year.



Gap reported a profit of $127 million for the period, or 32 cents a share, down from $239 million, or 56 cents a share, a year earlier.



Total company net sales for the quarter fell to $3.44 billion from $3.66 billion in the year-ago period.



Same-store sales fell 5%. By brand, same-store sales fell 3% at namesake stores, 11% at Banana Republic, and 6% at Old Navy.



“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Art Peck, CEO, Gap. “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”



Going forward, Gap said Old Navy’s near-term growth ambitions will be anchored in North America, including its most recent debut of company-operated stores in Mexico, as well as China and its global franchise operations. It’s worth noting that Japan was the first international market for its value Old Navy brand.



The retailer said that Japan will remain an important market for its portfolio, with more 200 Gap and Banana Republic stores.



The combined Old Navy and Banana Republic closings will entail about 75 locations in total.



Gap ended its most recent fiscal year with 3,721 stores in 51 countries.