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Shopping malls are a sinking ship, and The Gap Inc. is heading for the lifeboats.
The company discussed at a recent shareholders meeting its three-year plan, which includes closing 220 locations of its namesake store, primarily those located at indoor malls, the Associated Press reports. It will also be shutting down 130 Banana Republic stores over that same time period, ending in 2024.
The 350 total stores represent 30% of all current Gap and Banana Republic locations, and 80% of what remains will be outside of malls. Energy and resources devoted to those brands will be focused on expanding its lines of businesses at outlets and with e-commerce, AP reports.
The apparel conglomerate isn't on a full retreat from physical retail. Discount clothing seller Old Navy outperformed the Gap last year with $8B of revenue, which the company projects to increase to $10B by 2024. The Gap is planning to open 30 to 40 new Old Navy stores to support that projection.
The Gap's fastest-growing brand is activewear and athleisure brand Athleta, positioned as a lower-cost alternative to market leader Lululemon. The company projects Athleta's revenue to double by 2024 from the $1B it took in last year and will look to boost its store count from the current 200 to 300 over that time period.
The Gap has been one of many retailers that has failed to make complete rent payments to its landlords since the onset of the coronavirus pandemic, leading to a lawsuit from an Atlanta-area mall landlord in July. The company has also taken legal action of its own to escape from at least one lease in Manhattan.
Shopping malls were already on a downward trajectory entering this year, and the coronavirus has accelerated that trend to disastrous proportions. By at least one measure, the number of malls in the U.S. is projected to shrink by at least a quarter after the loss in business that the pandemic has wrought.
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