Gap To Shut A Fifth Of Stores In North America

Gap Inc has announced plans to shut nearly a fifth of its namesake stores across North America and shed 250 jobs as it tries to strengthen the brand.

The firm said it would close 140 Gap stores by the end of January 2016 and another 35 later based on factors including location and performance.

The San Francisco-based company, which also owns Old Navy and Banana Republic, is closing an undisclosed number of stores in Europe as well and will make the job cuts at its headquarters.

The Gap (NYSE: GPS - news) brand, known for its khaki clothing during the 1990s, has suffered from rival competition in recent years and the store closings and job cuts will save it around $25m a year.

The stores that will close, which will not include Gap Factory or Gap Outlet locations, generate around $300m in annual sales out of a total of more than $16bn.

Gap said it would continue to open new stores and will have around 800 in North America when the process is complete. It has 963 as of 2 May.

The company said it would help displaced employees find positions at nearby locations.

It currently employs around 141,000 staff worldwide, The New York Times reported.

Gap reported a 10% drop in store sales for the quarter up until 2 May and an 8% decline in earnings to $239m.