Gap Inc. plans to close stores in the U.S., while expanding in China.
The struggling retailer, which runs the Gap, Old Navy and Banana Republic chins, detailed plans on Thursday to close 189 locations, or 21 percent of its namesake Gap stores in the U.S., by the end of 2013. At the same time, the largest U.S. clothing chain said it plans to triple the number of Gap stores in China from about 15 by the end of the year to roughly 45 by the end of next year.
The moves are related to the company's previously stated goal of reducing its overall square footage in the U.S. by 10 percent from 2007 to the end of 2013, while roughly doubling revenue from outside of the U.S. to 30 percent by the end of the same year.
"The combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide," said Glenn Murphy, Gap's CEO, in a statement. "In North America, we're taking a number of steps to improve sales in the near-term, and I'm confident that with a strong management team in place, we're well positioned for sustained growth across the business.
Like many U.S. companies of all stripes, Gap has been looking overseas for growth as Americans continue to cut back on spending during the down economy in the U.S. But even before the U.S. economy took a turn for the worse, Gap lost its fashion edge. Its sales in the U.S. have eroded considerably since it drove America's love of khakis and all things business casual in the 1990s because of growing competition from specialty retailers like Abercrombie & Fitch and cheap chic merchants like H&M.