According to Fox News reported on the 23rd, the US apparel giant GAP plans to reduce stores in the North American market.
It is understood that GAP has entered major shopping malls in the United States in the past few decades and has become a “frequent visitor” to these shopping malls. However, GAP said it will close 220 stores of the same name by early 2024, equivalent to approximately 33% of the total number of stores in North America.
After these stores are permanently closed, up to 80% of the remaining GAP stores will no longer be located in shopping malls. According to reports, GAP will focus more on developing e-commerce business after closing 30% of its North American stores.
According to a number of foreign media reports, the US clothing giant Gap recently stated that it will close 350 stores by the beginning of 2024, accounting for about 30% of North American stores, including 220 Gap stores of the same name and 130 high-end brands “Banana Republic (Banana Republic). Republic)” store.
Earlier, the US clothing giant Gap stated that it was consuming cash at an alarming rate due to the forced closure of its stores during the new crown pneumonia epidemic. It has consumed US$1 billion since February and is expected to have only US$750 million left in his bank account by next week.
Gap said that if it cannot obtain the funds to help it maintain its operations, the future will be uncertain. “We need to take more actions to maintain existing liquidity and seek more sources of liquidity next year, because the money we make now is not enough to maintain operations.”
The reporter was informed that Gap is currently taking measures to retain cash, including letting approximately 80,000 store employees take vacations, cutting executive salaries, and not paying the April rent for temporarily closed stores. The last measure helped its North American stores save $115 million in expenses.
No money to pay rent, 80,000 employees have no wages and are forced to take vacations
GAP stated that in addition to the measures to close stores, the following 11 major measures have been taken:
1. All 500 million U.S. dollars drawn from revolving credit facilities;
2. Withdraw the full-year target for fiscal year 2021 issued on March 12, 2021;
3. Postpone the previously announced date of recording and payment of dividends for the first quarter of fiscal year 2021, and suspend regular quarterly cash dividends for the remainder of fiscal year 2021;
4. Suspension of stock repurchase;
5. Reduce planned capital expenditures by approximately US$300 million in fiscal year 2021;
6. Review all operating expenses to find opportunities to reduce expenses;
7. Adjust the inventory to the expected sales trend according to the time when the store reopens;
8. In the United States and Canada, most of the store teams are on vacation and suspend salary payments, but continue to provide applicable benefits until the store can reopen;
It is reported that GAP has more than 150,000 employees, of which approximately 80,000 employees in the United States and Canada, that is, more than half of the employees are forced to take leave.
9. Reduce the number of employees in functional departments of global enterprises;
10. Temporarily reduce the salary of the entire Gap leadership team and the board of directors;
11. Suspend rent payments for shops closed due to the epidemic.
Due to the outbreak, GAP has temporarily closed North American retail stores and many stores around the world in response to instructions from the government and public health authorities. Beginning in April 2021, GAP will immediately suspend the monthly rent of $115 million in store leases in North America.
Gap also said that it expects to close some stores soon.
Previously, its brands have withdrawn from the Chinese market and will close 230 stores in the future
It is worth noting that in March of this year, Old Navy, a brand under the Gap Group, announced the formal closure of all sales channels in the Chinese market. In the future, it will focus its business on the North American market to maximize benefits. Previously, from entering in 2014 to now announcing its exit, the brand has a total of 10 stores in mainland China, distributed in Beijing, Shanghai, Guangzhou, Chongqing, etc.
In addition, Gap has also stated that it will close 230 stores of the same name in the next two years.
The stock price has fallen by more than 60% this year, and the market value has evaporated 28 billion
As of April 25, Gap’s stock price has fallen 61.65% since February, reporting $6.9 per share. The market value has evaporated by about 4 billion US dollars (about 28 billion yuan).
On March 12, local time, Gap Group released the 2021 fourth quarter financial report and annual performance report. According to this financial report, Gap Group recorded a net loss of US$184 million in the fourth quarter of 2021, and a net profit of US$276 million in the quarter of 2021. Rating downgraded to “junk”
Misfortunes never come singly. Gap’s credit rating was downgraded by Standard & Poor’s Global Ratings on Thursday. The current rating is negative, citing the uncertainty of when the store will reopen during the flu pandemic and the uncertainty of “permanent” sales losses. The rating was lowered from BB to BB-, which belonged to the three levels of speculation or “junk”. Crazy discounts on the official website up to 2.5% off
GAP’s official website shows that all products are currently on sale in order to survive.
Founded for more than 50 years, the total number of stores exceeds 3,500
Founded in 1969 and headquartered in San Francisco, California, Gap is a deep memory of the postwar baby boom generation in the United States and has a profound influence in the United States. It is now an old brand for more than 50 years.
Gap’s latest data has approximately 150,000 employees and a total of 3,688 stores, distributed all over the world, such as: the United States, Canada, Mexico, France, Ireland, Japan, Indonesia, South Korea, Taiwan, Hong Kong, Malaysia, Singapore, and the United Kingdom And mainland China.