Gap To Fire Thousands, Close A Quarter Of All Specialty Locations

Tyler Durden's picture

Either the winter that is coming will knock the socks right out of the pre-quadruple seasonally adjusted GDP and the Gap knows all about this, or the much-hyped economic recovery, of which the US is supposedly in the 6th year now, has been nothing but a myth and a lie.

Moments ago, one of the biggest clothing retailers in the US confirmed the worst nightmares about the state of US consumer spending, when it reported that it would shut down over 25% of all of its specialty stores in the US, or about 175 (of which 140 will be shut in the current year), leaving the firm just 500 specialty locations and 300 outlet stores. And, in addition to the thousands of job terminations these closures would entail, the company will further fire another 250 in its headquarters.

Why? As the company admits: "To Increase Productivity and Profitability", to "deliver more consistent and compelling product collections and engage customers across all channels", because “Our customers and employees want Gap to win."

Well, maybe not the employees, and certainly not those that are not only about to get a modest severance package, but will make the BLS's role of painting the mass terminations "recovery" that much harder.

Oh well, that's what double, triple, quadruple and so on seasonal adjustments are for.

From the press release:

Gap Inc. Announces Strategic Initiatives to Increase Productivity and Profitability of Namesake Brand

Gap today announced a series of strategic actions to position Gap brand for improved business performance and build for the future. Following a thorough evaluation of its business and operations, Gap plans to right-size its specialty store fleet and streamline its headquarter workforce, primarily in North America, as part of the comprehensive effort to deliver more consistent and compelling product collections and engage customers across all channels.

“Returning Gap brand to growth has been the top priority since my appointment four months ago – and Jeff and his team bring a sense of urgency to this work,” said Art Peck, Gap Inc. chief executive officer. “Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers.”

In order to drive productivity improvements and showcase the brand in the most successful locations, Gap will close about 175 specialty stores in North America over the next few years, with about 140 closures occurring this fiscal year. These changes will not impact Gap Outlet and Gap Factory Stores. In parallel with these moves, the brand will close a limited number of European stores during this period.

Following the fleet optimization effort, the brand will continue to serve North American customers through about 800 Gap stores – comprised of 500 Gap specialty locations and 300 Gap outlet stores – as well as its dynamic online channels, better reflecting the way today’s customers shop across specialty, outlet and online. The brand will continue to have a robust global presence in more than 50 countries and with about 1,600 company-operated and franchise locations globally.

Our customers and employees want Gap to win,” said Jeff Kirwan, global president for Gap. “We’re focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores."

Since Kirwan was appointed to lead Gap in December 2014, he’s rebuilt the leadership team and implemented an aggressive agenda designed to strengthen the brand and successfully compete on the global stage. The team is driving towards a clear, on-brand product aesthetic framework focused on optimistic and elevated American style, while also rebuilding the brand’s product operating model to increase speed, predictability and responsiveness, and enable greater competitiveness.

To speed decision making and responsiveness, Kirwan also announced decisions meant to align Gap’s organization in support of its new product operating model. This will result in the reduction of the brand’s headquarter workforce, primarily in North America, by approximately 250 roles during fiscal year 2015.

 Kirwan added, “These decisions are very difficult, knowing they will affect a number of our valued employees, but we are confident they are necessary to help create a winning future for our employees, our customers and our shareholders.”

The company estimates an annualized sales loss of approximately $300 million associated with the store closures. Additionally, the company estimates one-time costs primarily associated with these actions to be in the range of approximately $140 million to $160 million, of which about $55 million to $75 million is non-cash. These costs are expected to be recognized primarily in the second quarter of fiscal year 2015 and include lease buyouts, asset impairments primarily related to the Gap fleet, inventory and fabric write-offs, and employee related costs associated with organizational changes.

The company estimates annualized savings from these actions to be approximately $25 million, beginning in 2016.

Excluding the estimated pre-tax costs of $140 million to $160 million referenced above, or approximately $0.21 to $0.24 per diluted share, the company is reaffirming its guidance for fiscal year 2015 to be in the range of $2.75 to $2.80. This guidance is provided to enhance visibility into the company’s expectations regarding its ongoing business excluding the Gap brand optimization effort.

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B2u's picture

Something wrong here....isn't the economy rebounding?

Gaius Frakkin' Baltar's picture

Perfect! Sounds like more students will be going back to overpriced schools to train for fake-ass phantom jobs.

B2u's picture

Time for more Gender Studies majors...

Winston Churchill's picture

Radio Gap will be sadly missed.

Amish FinEng's picture

The Amish would never shop there. It's a very vulgar name. GAP. Might as well call it camel toe.

MonetaryApostate's picture

I couldn't think of anything smartass to say, so, I'll let this song say it for me...

https://youtu.be/__VQX2Xn7tI

tbd108's picture

May the man who said “Our customers and employees want Gap to win” get his balls caught in a blender.  

spekulatn's picture

Green up arrows to the moon for you tbd108.

:)

WTFUD's picture

Nevermind the Gap your Screwed Anyhow's

Die Faster 22

Slomotrainwreck's picture

Your ass

You're screwed (you are)

capiche? Your post means you're mistaken.

 

<sarc>No offense intended, I'm sick of this shit. Go to colage</sarc>

COSMOS's picture

At some point the sheeple will go to the streets to protest and get slaughtered by the militarized police forces.  The culling will begin shortly...

Mr. Magoo's picture

There will be no protests, the frogs will continue to boil until their well done

Amish FinEng's picture

You don't want them well done. As soon as the skin separates from the body, she's done.

Goed eten!

tbd108's picture

I think they are already "well done."

cherry picker's picture

Not necessarily so.

Maybe for many it is true, but a well organized fast moving guerrilla campaign using old school methods may have a good chance of winning.  Think ISIS and see what they are able to get away with as well as some of the other groups out there against well equipped and trained military forces.

Winston Churchill's picture

As long as they are ruthless, they will win.

Target the Govt. stooges families, which I'm sure ISIS does.

The BLM couldn't get home quick enough after those addresses were put on the internet.

Freddie's picture

BLM addresses?  Was that at Bundy Ranch?   A lot of those BLM agents in cammo were mercs/Xe/Blackwater/Acedemie/DOUCHBAGS Merc's R Us.

The one "BLM" guy at the gate at Bundy was in videos in Afghanistan spewing shit. A really ugly MF'er too who could only get it if he paid for it.

giovanni_f's picture

There will be no riot to speak of unless large parts of the regular armed forces step up to the plate at some point to counter the fascist police apparatus whose militarization and people=enemy conditioning is about to be completed soon.

Freddie's picture

Didn't the Gap sell a lot of millenial f*g wear for metrosexuals?  Maybe they need to sell more hipster wear.

F the Gap, F millenials and baby goomers.

BLOTTO's picture

Ouroboros.

.

The snake is eating its own tail...

.

Evil is dysfunctional.

junction's picture

Mind the Gap!  Outside of the frothing at the mouth neocon TPP Beltway crooks, everyone knows the U.S. economy is being savaged by the Wall Street robber barons. 

williambanzai7's picture

No worries, they are hiring in Hong Kong. But no one is buying.

JustObserving's picture

Can Gap not seasonally adjust its sales and profits as the US does so effectively all the time?

Our customers and employees want Gap to win."

A fine example of Orwellian doublespeak.

Chart Of The Day: Retail Sales (ex Autos) Turn Negative For First Time Since 2009

 

by  • June 14, 2015

http://davidstockmanscontracorner.com/chart-of-the-day-retail-sales-ex-a...

Mae Kadoodie's picture

Apparently a GAP in earnings.

JoeTurner's picture

The giant H&M store across from Bryant Park in NYC is closing also. Most of the larger store fronts are being taken over by ever more luxury brands.

 

Collapses always start at the margins...

overmedicatedundersexed's picture

k mart sears jcp, going going gone.

indaknow's picture

Now that's a recovery you can believe in.

Arnold's picture

Gap is crap.

And I have a high school acquaintance that was a VP there.

Bobbyrib's picture

Yeah, I've read that their clothing quality is crappy.

Dollar stores should start selling clothing..good bye and good riddance to the rest of the Gap brands and all third world garbage clothing we are being sold.

dbTX's picture

Another summer to remember

corporatewhore's picture

Please, for the love of God, shutter JC Penney.  

Lostinfortwalton's picture

Hey, I shop there. Everything is not made in China. T-shirts, knit shits, cargo pants, and shorts at good quality for the price. I should go to Ralph Lauren and pay $90 for a knit shirt to BBQ in?

Thirtyseven's picture

No worries, the door began closing when JC Penny hired Ellen DeGeneris to talk down to and mock their own customer base. 

Not too much longer before it finally shuts and they put a chain and lock on it.

Consuelo's picture

GAAP...

 

 

 

Sudden Debt's picture

On the other hand... SUPERSIZE XXXXXXXXXXXXXXXXXXXXXL is opening 5000 new shops across America and is hiring!

BeansMcGreens's picture

Yep, seems to be one opening right next door to The Hideous Ink Superstores everywhere I look.

wmbz's picture

The newly fired at the GAP will be able to spend more time with there families. Get out to shop more, vaction and stuff like that... so it's a win.

SNAP!

kaiserhoff's picture

You forgot "write poetry while on welfare."

Berspankme's picture

No more "job lock" as Pelosi says. Forward

Gab Timov's picture

I never bought anything at the GAP.

Fack 'em.

valley chick's picture

Next up...stock buybacks!

Youri Carma's picture

Colt Defense, 179-Year-Old Gunmaker, Files for Bankruptcy
15 June 2015, by Tiffany Kary (Bloomberg)
http://www.bloomberg.com/news/articles/2015-06-15/colt-defense-179-year-old-gunmaker-files-for-bankruptcy

mastersnark's picture

I'm not sure people can appreciate just how incompetent you have to be to have lost money in the largest bull market in the history of firearms; it should have been like running a candy store at a fat camp.

Bighorn_100b's picture

Understatement of the year!