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Published on : Jun 17, 2015

Clothing major Gap Inc. announced to lay off 250 workers and to shut 175 stores. 

The closing operations is both beneficial and disadvantageous to the company. The closing of the stores will lead to decline of US$300 million in sales annually and also incur one time costs of as much as us$160 million. The action will lead to saving of US$ 25 million annually for the company.

As part of the closing of the stores program, most of the layoffs and store shut downs are for North America. Of all the Gap operations worldwide, as much as 26% of the stores in North America will be shut down, though the specific stores have not been identified.

Gap will also lay off personnel at its San Francisco headquarters and other quarters all over the country.

The closing of stores will happen in parts. In first phase of the closing 140 stores will be closed in this fiscal year and the remaining to close in the next few years. In the closing of the Gap stores move is a select European stores that are on the list. 

The Gap runs four operations in Milwaukee, one located at Bay shore Town Center, two stores at Mayfair in Wauwatosa area, and one outlet store in Pleasant Prairie. No factory store or outlet store will be affected.

Post the changes, Gap will have 800 stores in North America which will be divided as 300 Gap outlet stores and 500 Gap specialty locations. After the changes, Gap will have presence in over 50 countries and will have about 1600 company run and franchised stores.