The three-level Gap store on Fifth Avenue in New York City is shutting down next month — and more retail locations might soon follow suit.
A company spokesperson told CNBC that the location will officially close on January 20. Gap declined to give details on why it has decided to close that particular store.
While retail space in NYC is notoriously expensive, the area where this Gap is located — Fifth Avenue between 49th and 59th Streets in Midtown Manhattan — saw rents drop 24 percent this fall, according to the Real Estate Board of New York, which added that the average rent in that location is $2,973 per square foot.
Unfortunately, the Fifth Avenue location might not be the only brick-and-mortar storefront closing down. The company recently said it might “aggressively” shut down hundreds of other locations to focus on higher-performing stores. In fact, Gap President and CEO Art Peck recently said the brand’s biggest challenge was legacy elements, such as real estate obligations. And while the company has a profitable outlet business, with roughly 500 stores around the world, the remainder includes its specialty store business, which is currently underperforming.
Last month, Gap Inc. reported better than expected Q3 results, with earnings per share of $0.69 and revenues of $4.1 billion, compared to analysts’ estimates of $0.68 and $4 billion. But when it came to comp sales, the company’s Gap Global brand saw a negative 7 percent in comparable sales compared to a positive 1 percent reported last year.
By contrast, Old Navy Global presented a steady 4 percent growth, and Banana Republic Global had positive 2 percent growth compared with the negative 1 percent it saw last year.
Addressing the results of the Gap Global brand, Peck said that “while the performance of Gap brand this quarter was not entirely surprising, clearly, we’re disappointed, and we need to do better.”