Gap — as it tries to refocus, rebuild and get back on track — is moving to streamline its business model, which means it will be saying goodbye (or sayonara) to Japan, at least for its Old Navy brand.
Gap Inc. in total operates 53 Old Navy stores in Japan, all of which will be closing along with a scattering of Banana Republic locations mostly located in North America.
The move was announced as part of Gap Inc's quarterly investor call — a delightful conversation about the chain's fifth straight quarter posting falling revenue and profit. Adding to the hit parade of good news, Gap was also unable to affirm its earnings guidance of the remainder of the fiscal year.
Gap reported a profit of $127 million for the period, or 32 cents a share, down from $239 million, or 56 cents a share, a year earlier. Net sales fell to $3.44 billion from $3.66 billion one year ago.
Same-store sales dropped 5 percent on average. Broken out by brand, that nets out to 3 percent at the Gap itself, 11 percent from Banana Republic and 6 percent from Old Navy.
“As the pace of change across the apparel industry increases, now is the time to accelerate our transformation by scaling our product and operating capabilities across our global portfolio,” said Gap CEO Art Peck. “By taking every opportunity to exploit our strategic advantages, our brands will be able to more fully harness the power of the enterprise to better serve their customers across channels and geographies.”
The new vision involves anchoring Gap and Old Navy in North America, which obviously includes their home base of the U.S. but also a string of fairly new stores in Mexico. Gap will also continue to pursue China and global franchise opportunities.
Notably, Japan was Old Navy's first non-U.S. market.
The retailer said that Japan will remain an important market for its portfolio, with more 200 Gap and Banana Republic stores.
As of the end of FY 2015 - Gap was operating 3,721 stores in 51 countries.