Gap downsizes in North America, plans to expand overseas

Posted Oct 14, 2011 by Leigh Goessl
The Gap has announced plans to close about 200 of its North American stores and turn the company's attention to overseas market opportunities for expansion.
GAP store: CentralPlaza Ladprao
GAP store: CentralPlaza Ladprao
According to Gap Inc.'s press release on Oct. 13, the company is looking to "reduce dependency on North American stores" as sales are expected to grow "modestly", whereas the company perceives opportunities overseas.
Incorporated in the plan is for the company to have 700 stores in North American by 2013, currently Gap has 889 stores that are operational, a 21 percent decrease in stores located throughout North America. It also looks as if the company aims to reduce American square footage by 10 percent by fiscal year 2012
The Gap is parent to several other brands including its namesake Gap, along with Banana Republic, Old Navy, Piperlime, and Athleta. As one of the first steps, Gap plans to bring the Old Navy brand to Japan; this is planned to occur within the next 18 months. Additionally Gap is going to "nearly triple" the number of Gap stores in China. It is anticipated that the number of stores will increase from 15 to 45 by the end of next year. Paris will gain its first Banana Republic.
“The combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “In North America, we’re taking a number of steps to improve sales in the near-term, and I’m confident that with a strong management team in place, we’re well positioned for sustained growth across the business.”
The LA Times reporteda spokesperson for Gap Inc. said the company is not revealing which stores are slated to be closed.
"We've been in some malls for a really long time; in some instances the demographics may have changed, so it may not make sense for a Gap brand store to be there anymore," spokeswoman Louise Callagy said. "The goal overall is to return the brand to health, and part of a healthy brand is a high-performing fleet" of stores."
It seems perhaps Gap's ability to profit has been impacted by a shrinking middle class. Reportedly Gap Inc. has been struggling partially due to consumers turning to "trendier" competitors and, the other reason noted is the brand's niche market is middle-income bracket.
In the last quarter published, Gap had reported a 19 percent decrease in profits, and over time has experienced a continuous drop in stock value. According to Marketwatch, the Gap closed yesterday with a .04 percent increase after the announcement.
Last year Gap experienced a marketing fiasco after the corporation decided to change its logo. Consumer response was very negative with fans of the brand taking to social media outlets to complain. Gap, relatively quickly, brought back its old familiar logo.