Analyst Thinks The Gap Needs to Close 175 More Stores in North America

Posted on May 2, 2016

Gap 1969 skinny jeans Spring 2016 campaign

The Gap has greatly reduced its North America stores over the past several years. The company had over 1,150 stores in North American in 2009. It is expected to have less than 800 stores in the region by 2008. One analyst still thinks more Gap stores need to close.

The Gap announced 175 store closings in June 2015. A Fortune story says Deutsche Bank analyst Paul Trussel thinks the Gap has not yet closed enough of its stores. Trussel thinks the clothing brand could shutter another 175 stores in North America. The article also says March losses at Gap's Old Navy and Banana Republic brands shocked investors in March.

Trussel wrote in a research note, "We believe market share losses, an aggressive promotional landscape, weak traffic trends and fashion mishaps should continue to be too much to bear."

Retailers face tough decisions when expanding. If you expand too much it can increase costs without increasing sales enough. On the other hand closing stores can reduce revenues and brand exposure. Clothing sales continue to move online but there is still some foot traffic in malls in the U.S. and Canada. Trussel thinks there are still too many Gap stores. Fortune says if Gap follows Trussel's advice it will be left with 525 locations in North America, 375 of which are regular stores. That would make for a much smaller Gap.

Photo: Gap