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Gap, the biggest mall clothing store in the United States, plans to close 140 of its stores this year and 175 more within the next few years. That amounts to 25 percent of the stores it currently has in North America.
The company plans to buy out leases rather than wait for them to expire, and it will pay around $40 million to do so. The closures are expected to cost Gap an additional $300 million in the form of money it will lose to competitors in annual sales.
Gap’s CEO, Art Peck, has stated that he would rather lose that money than have Gap stores continue to languish in malls that nobody visits anyway. Although Gap hasn’t announced which stores it will close, the news is yet more proof of the growing division between malls, which are classed in four categories. At the top of the heap are the “A” malls which are patronized by wealthy shoppers and are home to brands like Tiffany & Co. At the bottom are “D” malls, with “D” standing for “dead.” “C” and “D” malls get few visitors and have trouble holding on to retailers.
FreedomPop wrote that Gap, which also owns Banana Republic and Old Navy, had been seeing sales decline for the last 16 months. All of the stores being closed are full-price stores, and Gap is keeping all of its outlets. By the end of the closures, Gap will have 300 outlets and 500 regular stores.