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Gap brand to streamline workforce & store fleet
Jun '15
Following a thorough evaluation of its business and operations, apparel marketer Gap Inc, plans to right size its Gap brand specialty store fleet and streamline its headquarter workforce, primarily in North America.

“This is part of the comprehensive effort to deliver more consistent and compelling product collections and engage customers across all channels,” it said in a press release.

“Returning Gap brand to growth has been the top priority since my appointment four months ago and Jeff and his team bring a sense of urgency to this work,” said Gap Inc CEO Art Peck.

“Customers are rapidly changing how they shop today, and these moves will help get the Gap brand back to where we know it deserves to be in the eyes of consumers,” Peck added.

The Gap brand will close about 175 specialty stores in North America over the next few years, with about 140 closures happening in this fiscal.

These changes will not impact Gap Outlet and Gap Factory Stores and in parallel with these moves, the brand will close a limited number of European stores during this period.

Following the fleet optimisation effort, the brand will continue to serve North American customers through about 800 Gap stores, comprised of 500 Gap specialty locations and 300 Gap outlet stores.

The brand will continue to have a robust global presence in more than 50 countries and with about 1,600 company-operated and franchise locations globally.

“Our customers and employees want the Gap brand to win,” said Jeff Kirwan, global president for Gap brand.

“We are 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," he too added.

Since Kirwan was appointed to lead Gap brand in December 2014, he has rebuilt the leadership team and implemented an aggressive agenda designed to strengthen the brand.

“The team is driving towards a clear, on-brand product aesthetic framework focused on elevated American style, while also rebuilding the brand’s product operating model,” the apparel marketer informed.

To speed decision making and responsiveness, Kirwan also announced decisions meant to align Gap’s organisation in support of its new product operating model.

This will result in the reduction of the brand’s headquarter workforce, primarily in North America, by approximately 250 roles during the current fiscal.

Kirwan observed, “These decisions are very difficult, knowing they will affect a number of our valued employees, but we are confident they are necessary to help create a winning future for all.”

The company estimates an annualised sales loss of approximately $300 million associated with the store closures.

Additionally, the company estimates one-time costs associated with these actions to be in the range of approximately $140 million to $160 million, of which about $55 million to $75 million is non-cash. (AR)

Fibre2fashion News Desk - India

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