Gap to Slash Namesake Store Count: Never Too Late, I Guess

Gap Inc. plans to shut more than a fifth of its Gap stores in North America over the next two years, a comedown for the struggling retailer and a stark symbol of the way the tepid recovery and rise of online shopping have altered the landscape at shopping malls.

Once the world's largest specialty apparel chain by revenue, Gap pioneered the strategy of developing a popular store and expanding it to every viable shopping location in the U.S.—then beginning the process all over again with a new brand.

But that approach, which produced heady growth as Gap and other retailers raced to build a coast-to-coast presence, came back to haunt it after the recession exposed an oversaturated market, with far more stores than shoppers to fill them.

Acknowledging that mismatch, Gap, which also owns the Old Navy and Banana Republic chains, said Thursday it will shrink its network of Gap stores in North America to 700 by the end of 2013, down 189, or 21%, from the 889 stores open at the end of June. The company has been paring back its North American store count over the past few years, but hadn't previously disclosed it planned such deep cuts so quickly.

Associated Press

A shopper leaves a Gap store in Palo Alto, Calif.

via online.wsj.com

Berk: Another consequence of too much debt - too much retail space across the United States.  GAP should have done this years ago as I advocated then.  Retailers can't just open stores for growth - the stores have to have sustainable EVA.  Most opened for growth ot market share's sake don't.

Disclosure: We have owned GAP in the past.  We don't own it now.  We might buy it soon.