Iconic American retailer The Gap announced on Tuesday that it will close 175 stores across North America over the next few years as it struggles to turn around the business.
A “limited number” of European stores will also be closed, the San-Francisco-based company said in a statement.
The company also announced further cuts of about 250 jobs from its head office in addition to the store closings.
Once known for its trendy jeans and celebrity endorsed khakis, it has been struggling with falling sales amid competition from fast-fashion brands like H&M and Zara.
Same store sales for the Gap brand fell by 15% in April, compared with a 3% increase in the same month last year.
Chief executive Art Peck said: “Returning Gap brand to growth has been the top priority since my appointment four months ago.”
“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” he added.
Yet how growth will happen remains unclear, as the closures will result in $300 million of lost sales, Gap said, and result in a one-off cost of between $140 to $160 million.
It did not say how many employees would be laid off as a result, though there will likely be over 2000 layoffs.
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