Gap May Close Hundreds Of Stores

By Douglas A. McIntyre Published Oct 15, 1:00PM EDT

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Gap May Close Hundreds Of Stores — © Gap (CC BY 2.0) by Mike Mozart

Gap has not been able to get its mix of brands and inventory right for years. It has serially closed stores and shuffled through CEOs. Matters could get worse across the holiday season. A new analysis shows Gap may need to close hundreds of stores.

The analysis of Gap’s trouble was reported by CNN Business as part of an analysis of several troubled retailers. Among these, companies that include Bed Bath & Beyond may not survive at all.
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Gap’s recent financial reports indicate how deeply troubled its operations are. In the most recently reported quarter, revenue fell 8% to $3.86 billion. Same-store sales plunged 10%. Even with this sharp drop, Gap has decided to keep open 3,390 stores that house its Old Navy, Gap, Banana Republic, and Athleta brands.

Two things stood out when Gap released its results. The company has counted on its largest brand — Old Navy — as its savior. Its revenue dropped 13% to $2.1 billion. Same-store sales dropped 15%. And, as far as investors are concerned, Gap violated a cardinal rule of earnings announcements. It said it would not provide guidance for the balance of the year. “Given the actions the company has underway and in midst of a CEO transition, combined with the uncertain macro-environment, the company is withdrawing its prior fiscal 2022 outlook.”

Gap shares something with Bed Bath & Beyond. Both need to be turned around by the end of 2022, and both only have interim CEOs.

Gap’s stock has fallen 56% this year. The retailer has less than three months to answer why the shares should not drop more. The holiday season has started for many Americans. Inventories that are too high at many retailers have caused an avalanche of discounts. Price cuts have started to be a race to the bottom. Gap has to contend with larger discount operations like Target, Walmart, and Amazon. These companies also have the balance sheets to carry them through a difficult period.
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Gap’s chance to recover has probably come and gone. When results through December 31 are released, Wall St. will know for certain.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.