Gap Inc. shifting focus-and store footprint-to two brands

Gap Inc. shifting focus-and store footprint-to two brands”

The nation's largest specialty apparel retailer had decided that its future growth lies primarily in its lower-priced Old Navy and athleisure-positioned Athleta brands.

That includes the addition of about 270 Old Navy, Athleta and what Gap calls "value expressions" across its real estate portfolio. And Athleta, which sells athletic clothing, is expected to exceed $1 billion in sales.

The company says it expects about $500M in expense savings over the next three years through the leveraging efforts, cross-brand synergies and streamlined operations.

At a Goldman Sachs conference today, Gap (GPS) described its strategy to grow its business, and if there were ever doubts before, the retailer confirmed that Old Navy is the growth is at.

Banana Republic and the company's namesake Gap brand haven't fared as well in recent years.

Gap's moves are the latest to reinvent the chain and are being spearheaded by Peck, who took the helm in 2015.

Store closures have become familiar throughout the retail sector, as traditional store chains struggle to attract foot traffic with a growing number of consumers choosing to shop online.

Gap CEO Art Peck admitted that the decline in the underperforming stores has been "significant and acute", adding that the company committed some "creative missteps" in attempting to add appeal to the brands for a contemporary audience. It's also been working hard to improve fit - a problem that has long bedeviled the retailer- and it's been trying to rework its fashions. Last month, Sears Holdings added another 28 Kmart locations to its list of 330 Sears and Kmart stores that it has already shuttered or plans to close by the end of this year.

The company has built a highly profitable online and mobile business with double-digit sales growth and industry leading capabilities. Online sales will also be a focus, with the company planning to accelerate investments in direct fulfillment capacity, loyalty, personalization, artificial intelligence, and data-driven customer experiences. It's also testing a subscription service at its Baby Gap brand.

Including Wednesday's gains, Gap shares are up almost 11 percent in 2017.

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