More mall pain ahead as Gap and Banana Republic stores close by the dozens
More bad news for the mall as Gap (GPS), a key tenant across many a suburban mall, announced it will close 200 Gap and Banana Republic stores. These closings equate to 10% of the total number of Gap and Banana Republic locations and add to the growing vacancies at malls that spell trouble for mall-based REITs such as Simon Property Group (SPG) and GGP Inc. (GGP). Gap management blamed “creative missteps” at Gap and Banana Republic and we agree these businesses have lost their way with Rise & Fall of the Middle Class and Affordable Luxury consumer. Despite those issues, Gaps Old Navy business continues to thrive as its lower priced apparel appeals to the Cash-Strapped Consumer. With Amazon expanding its private label presence into apparel, we have to wonder what creative fixes Gap intends to make to win back consumers and their wallets?
Gap (GPS), the parent company of all of those brands, said Wednesday that it plans to close about 200 “underperforming” Gap and Banana Republic locations.
There are currently about 2,000 Gap and Banana Republic stores worldwide, according to public filings, so the closures would likely impact about 10% of them. Gap declined to specify how many of each brands’ stores will close or where the soon-to-be shuttered stores are located.
Both Gap and Banana Republic have seen declining sales in recent years and they’ve struggled to compete with so-called fast fashion retailers such as Forever 21 and H&M.
Speaking at a retail conference Wednesday, Gap CEO Art Peck described the sales downturns at Gap and Banana Republic as “significant and acute,” and admitted the company made “creative missteps” in its efforts to keep the brands competitive.
