Gap reports $932m quarterly loss after Covid-19 shutdown

US clothing retailer Gap has reported a quarterly loss of almost $1bn, after it had to close the vast majority of its stores worldwide during the coronavirus shutdown.

The company, based in San Francisco, made a loss of $932m (£738m) for the three months to 2 May, compared with $227m profit during the same period in 2019.

The retailer, know for its denim, chinos and T-shirts, included in its quarterly loss a $484m write-down on its stores and operating lease assets, and a $235m charge on excess stock.

Like many of its competitors, Gap has been left with mountains of seasonal clothing it has not been able to sell, while 90% of its global stores were temporarily forced to close during lockdown.

Retailers of non-essential goods, such as clothing, have been significantly affected by store closures across many territories, which were designed to slow the spread of Covid-19.

The pandemic triggered several high-profile retail insolvencies in the US, including fashion chain J.Crew and department store chains JC Penney and Neiman Marcus.

The group, which also owns the Old Navy and Banana Republic brands, said customers were focused on buying casual clothes while staying at home, hitting sales at Banana Republic, which offers more workwear.

Gap has almost 2,800 stores in North America and has reopened 55% of its company operated stores in the region. It hopes to reopen most of the rest throughout June.

A range of retailers are permitted to reopen in England from 15 June, provided they install physical-distancing measures inside stores.

Gap’s chief executive, Sonia Syngal, reported that online sales doubled in May, adding “we are optimistic that the actions we’ve taken will provide a stable foundation as we navigate near-term uncertainty and refashion Gap Inc for long-term growth”.

The retailer has previously announced plans to close shops to streamline its store estate. It said it would look to close some Gap and Banana Republic branches while also seeking rent concessions.

The group said it had stopped paying rent for closed stores in April, extended its payment terms to suppliers and deferred its first-quarter dividend as it sought to cut costs and preserve cash.

Gap is being sued by the largest shopping mall operator in America for unpaid rent during the coronavirus shutdown.

Simon Property Group, which counts Gap as one of its biggest tenants, filed a lawsuit on Thursday, accusing Gap of failing to pay almost $66m in rent and charges while its stores were closed.

Commercial property landlords in the the UK have been temporarily banned by the government from taking legal action against tenants who refuse to pay their rent until 30 June.