Gap May Need to Close More Stores, Again

Gap Inc. (NYSE: GPS) has had to close many stores in the past, especially those of its flagship brand. The brand is in trouble again. As same-store sales fall, Gap faces the store count problem once more.

The company announced:

Net sales were $4.1 billion, an increase of 8% compared with last year. Excluding the presentation changes from the adoption of the new revenue recognition standard, net sales increased 4% compared with last year.

The translation of foreign currencies into U.S. dollars positively impacted the company’s net sales for the second quarter of fiscal year 2018 by about $23 million1. Second quarter net sales details appear in the tables at the end of this press release.

But same-store sales were choppy across its brands:

Old Navy Global: positive 5% versus positive 5% last year
Gap Global: negative 5% versus negative 1% last year
Banana Republic Global: positive 2% versus negative 5% last year

The last time Gap closed stores was to shift efforts to Old Navy. In 2017, Gap closed over 200 Gap and Banana Republic stores. It said it would open about 270 Old Navy and Athleta locations.

So far 2018 looks like a carbon copy of 2017. Gap may be unable to support all of its stores, at least if it wants the brand to make money.