Hundreds of Gap stores could close across Europe after the American fashion retailer said that it was considering changes to its business model outside the United States.
Shares in the San Francisco-based company jumped last night after it said that options under consideration included the possible closure of outlets in Britain, France, Ireland and Italy by mid-2021. That could put up to 3,000 UK jobs at risk.
Gap, which had 129 Gap-branded stores in Europe at the end of July, wants to focus on its domestic American business. The group is looking to operate more through franchises in Europe in the future.
“Franchisees already operate in 35 countries through 400 stores and we believe there is significant room to expand our franchise footprint,” Katrina O’Connell, Gap’s chief financial officer, said yesterday at a virtual investor event.
The move comes as Gap struggles with out-of-fashion styles and intense competition from rivals including Zara, part of the Spanish Inditex group, and H&M, of Sweden. The pandemic has compounded its troubles by delivering a severe hit to its store sales worldwide.
Gap also said yesterday that it was reviewing its warehouse and distribution model and its Gap and Banana Republic-owned ecommerce operations in Europe. Earlier in the year Gap said that it planned to close more than 225 unprofitable Gap and Banana Republic stores globally.
Gap was founded in 1969 by Donald and Doris Fisher in San Francisco. The company now has more than 3,800 stores worldwide, under brands also including Old Navy and Athleta and featuring 611 Gap outlets in the US.