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Gap looking to close hundreds of stores

Gap is putting hundreds of stores on the chopping block as it looks to exit costly real estate obligations.

Chief executive of the US-based retailer, Art Peck, said that the brand would look to evaluate the bottom half of its store fleet, which is seen as a drag on the health and performance of the brand.

The affected stores largely fall within the retailer’s specialty business, which is under-performing compared to Gap’s online and outlet stores.

“This is the piece of the brand that we are firmly committed to addressing with urgency,” Peck said in an investor call this week, following the release of the company’s third-quarter results.

“It includes some amazing flagship stores around the world that we’re evaluating with an objective eye on which ones provide sufficient value to keep. Collectively, the flags have meaningful negative contribution.”

Peck said he is looking to “get this one done and… behind us”, adding that there will likely be a cash cost to exit stores.

“I’m going to move thoughtfully, but aggressively. We will come back to you with more detail on our planned actions by the time we layout our guidance for the coming fiscal year,” Peck said.

Net sales for the third quarter reached US$4.1 billion ($5.65 billion) while gross profit increased to US$1.62 billion ($2.23 billion) – both figures representing a growth of 2 per cent over the previous corresponding period.

The business expects full-year comp sales to be flat to slightly up for Q4. The Gap brand is expected to show progress but remain down for the year.

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