Gap, an American clothing giant, plans to cut stores in North America, Fox News reported. It is understood that gap has entered major shopping centers in the United States in the past few decades and has become a "frequent visitor" of these shopping centers.However, gap said it would close 350 stores by the beginning of 2024, equivalent to about 33% of all stores in North America. It includes 220 gap stores with the same name and 130 high-end brand "Banana Republic" stores.
After these stores are closed permanently, up to 80% of the remaining gap stores will no longer be located in shopping malls. Gap will focus more on e-commerce after closing 30% of its North American stores, the report said.
350 stores closed in North America, gap plans to transform e-commerce business
Gap, an American clothing giant, is ready to close 350 stores in one breath, according to foreign media reports. The company said it would close 220 gap stores of the same name by early 2024. That's about 33% (one-third) of the total number of stores, and as much as 80% of the remaining gap stores will no longer be in shopping malls after these stores are permanently closed.
Gap group has a number of brands, including gap, Old Navy, Banana Republic and ATHLETA, and now has more than 400 stores and 14 e-commerce websites in 35 countries. Affected by the epidemic, many stores have had to suspend business, and consumers have moved more to the online. Many American experts believe that the change in consumer behavior will be permanent. Just after the announcement of the gap's three-year reform plan, the gap group's share price rose 14% on the same day, reaching a 52 week high.
Gap is currently reassessing its business in Europe and may close gap stores in the UK, France, Ireland and Italy by the end of the second quarter of 2021. In addition, gap is also evaluating the warehousing and distribution modes, as well as the e-commerce operations of gap and banana republic in Europe, which may close an EU distribution center, and some of gap's business in Europe may be transferred to a third party in the form of partners. After gap said it was conducting a strategic assessment of its European business and could close gap stores operating in the UK, France, Ireland and Italy by the end of the second quarter of 2021. Many investment banks on Wall Street are optimistic about this move and have raised the target price of gap.
RBC Capital Markets raised its target price to $28, Barclays to $27 and Telsey advisory group to $23. All three companies saw the benefits of gap's downsizing program by cutting unprofitable stores.
Sales of physical retail industry in the United States is poor
According to an earlier report by people's daily.com, according to the report of BDO USA LLP, the government's mandatory temporary closure of shops and homes in the early stage of the epidemic has exacerbated the plight of physical retailers. Consumers who stay at home are buying more online products than ever before, the report said.
J. Large retailers such as C. Penney Co. (JCP), Neiman Marcus Group Inc., GNC Holdings Inc. (GNC) and Brooks Brothers Inc. (brks) filed for bankruptcy protection this year, closing hundreds of stores each. Since April, about 5000 stores in the United States have been closed forever, while only about 680 new stores have opened in the same period. Nearly 2200 retail stores closed in August alone, with only 14 new.
An estimated 25,000 U.S. retail outlets will be closed, according to data Coresight Research by global market research firms. BDO said the high closure rate of physical stores is expected to continue. More than 10,000 U.S. physical stores were closed from January to mid-August, including Macy's Macy's-August
Compared with the bustle of online shopping platforms, traditional industries are covered by the dark clouds of bankruptcy. According to S & P's global market intelligence statistics, up to now, more than 500 large-scale enterprises have applied for bankruptcy in the United States this year, exceeding the number of bankruptcy applications in any comparable period since 2010. According to the American bankruptcy Association, U.S. commercial bankruptcy filings increased by 38% in September to 3072, a year-on-year increase for 11 consecutive months. In September this year, there were 855 applications for commercial bankruptcy, an increase of 38% over the same period last year.
Edward Altman, an emeritus professor at New York University's Stern School of Business, said that if the next rate of bankruptcy remains so high, the number of US $1 billion or more bankruptcies could reach 65 by the end of the year. The previous high of 49 in the 2009 economic crisis will break that record this year.
The wave of bankruptcy affects not only the physical retail industry, but also the traditional industries such as oil, aviation and entertainment. Global Eagle Entertainment Inc., headquartered in Westchester, filed for Chapter 11 bankruptcy protection on July 22. Global Hawk gets non dramatic distribution and music from Hollywood and international independent producers, while also providing travelers with satellite based WiFi Internet. In the novel coronavirus pneumonia, Christian Mezger, the Global Hawk chief financial officer, said that the airline had been suspended or had seriously reduced its operations because of its adverse impact on the new crown pneumonia epidemic and was unable to submit bankruptcy applications.