Investing.com -- Gap Inc (NYSE:GPS) announced on Monday that it will close 175 stores from its namesake brand in a cost-cutting measure aimed at delivering more consistent and compelling product collection.
The San Francisco-based retailer will close the specialty stores in North America over the next several years, with 140 of the closures taking place this year. In addition, the company will close a handful of European stores during the period.
"Returning Gap brand to growth has been the top priority since my appointment four months ago," Gap Inc. CEO Art Peck said in a statement. “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.”
Gap anticipates that the store closures will result in a one-time loss of $140-$160 million (0.21-0.24 per share) and annual sales losses of up to $300 million. The company anticipates that the majority of losses will be realized in the second quarter of fiscal year 2015.
“Our customers and employees want Gap to win,” Gap global president Jeff Kirwan said in a statement. “We’re 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."
"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 our employees, our customers and our shareholders," Kirwan added.
Following the closures, Gap will have approximately 500 specialty locations and 300 outlets throughout North America.
Shares in Gap gained 0.51 or 1.32% to 38.70 in after-hours trading.