Gap considers closing stores and depot in the UK next year

Laura Onita
·2-min read
Gap clothes - Hollie Adams/Bloomberg
Gap clothes - Hollie Adams/Bloomberg

Gap told staff this week that it could exit its business in Europe, which could see scores of store close in the UK, with its distribution centre in the Warwickshire market town of Rugby also at risk. 

The American fashion chain has more than 70 branches in the UK and just under 130 elsewhere in Europe.

Mark Breitbard, the head of Gap’s global operations, said he wanted to bolster its franchise model rather than own shops.  The move, which could lead to more job losses in retail, would be “a strong and cost-effective way to amplify the brand”, he said. 

Gap, which less than 20 years ago had the same market share as thriving rival Primark, according to GlobalData, is planning to exit the EU next year. Its parent company closed all its Banana Republic branches in the UK two years ago. 

The news emerged a day before a meeting with investors to unveil a turnaround strategy for the company by 2023. Sales in Europe fell by 47pc during the quarter ending in August to $72m (£55m). 

Despite a potential exit from Europe, Gap Inc's shares soared 14pc in New York on Thursday to the highest level since May 2019 after the parent company said it expects to return to profitability next year, easing some concerns over the financial impact of the pandemic.

The business is undergoing a revamp, which includes the expansion of its Old Navy and Athleta brands to make up 70pc of total sales compared to the current 55pc, according to Bloomberg. It also wants 80pc of all stores to be outside traditional shopping centres by 2023, in a rethink of its store footprint. 

Gap is the latest fashion chain to consider store closures as shoppers tighten their belts, albeit its products lost their appeal with younger shoppers a while ago. Increasing competition from online fast-fashion players such as Asos and Boohoo has added to its travails. 

"One of the options being explored is the possible closure of our company-operated Gap stores in the United Kingdom, France, Ireland and Italy at the end of the second quarter in 2021," the company said in a statement. 

"In addition, we are reviewing our warehouse and distribution model and our Gap and Banana Republic company-owned e-commerce operations in Europe. A possible outcome is the closure of our EU distribution center in Rugby." 

A flurry of high street names including Debenahms, John Lewis and Edinburgh Woollen Mill have been closing stores and laying people off during the pandemic.