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Gap Cutting Square Footage By Up to 15%

Posted by ecoshift on August 22, 2008

Gap Cutting Square Footage By Up to 15%http://www.globest.com
By Debra Hazel

SAN FRANCISCO-With declining comps but soaring earnings due to cost-cutting, and its real estate analysis now complete, Gap has dropped the number of store openings this year and will cut its overall square footage 10% to 15% over the next three to five years, executives said at the company’s second quarter conference call.

In July, the company completed an analysis of its 3,170 stores, seeking to assess the role of each store in its market and the appropriate size for each unit. The results showed that Gap’s chains had too much space, says Glenn Murphy, chairman and CEO of Gap Inc.

“We’ve never had a clear real estate strategy,” Murphy explains. “We now have that information, and it will allow us to make quick decisions. The real estate comes down to the quality of the mall and the quality of the real estate.”

Second quarter net sales were $3.5 billion, compared with $3.69 billion for the second quarter of last year. Overall comparable store sales decreased 10%, with Gap North America, Banana Republic North America and International reporting 6% comp declines, while Old Navy North America posted a 16% comp drop. Online sales however, rose 11%. Net earnings increased 51% from the previous year to $229 million. The company does not expect a major change going forward, while vowing to be aggressive in efforts to drive more shopper traffic.

“There’s nothing new from our perspective for the second half,” Murphy said. “The environment is still challenging. We see no reason for optimism and are managing our business accordingly.”

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One Response to “Gap Cutting Square Footage By Up to 15%”

  1. Where is the end? 1, 2, 3 years more? How is your area doing?

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