U.S. clothing giant GAP can’t support it: plans to close 350 stores in a large area to transform e-commerce business
Original title: Too miserable! Another giant in the United States can’t hold it anymore. It plans to close 350 stores on a large scale and transform its e-commerce business.
Every time the editor Bi Luming
is too miserable, the American clothing giant GAP also “Dropped”!
According to a report from CCTV Finance on the 24th, according to Fox News, the US clothing giant GAP plans to reduce stores in the North American market. It is understood that GAP has been stationed in 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 will close 350 stores by early 2024, equivalent to about 33% of the total number of stores in North America. Including 220 Gap stores of the same name and 130 stores of its high-end brand “Banana Republic”.
After these stores are permanently closed, up to 80% of the remaining GAP stores will no longer be located in shopping malls. According to reports, after closing 30% of North American stores, GAP will focus more on developing e-commerce business.
North America closed 350 stores, GAP intends to transform its e-commerce business
According to a report by China Fund News on the 25th, according to foreign media reports, American clothing giant GAP is preparing to close 350 stores in one go. The company said it will close 220 GAP stores of the same name by early 2024. This is equivalent to about 33% of the total number of stores, and after these stores are permanently closed, up to 80% of the remaining GAP stores will no longer be located in shopping malls.
As part of the corporate restructuring plan, GAP also plans to close its 130 “Banana Republic” stores in North America within 3 years. GAP said that closing stores will help the group resume profit growth in 2021. According to foreign media reports, the group has launched a three-year reform plan. According to the plan, after closing 30% of its stores, the company will transform to a business model that combines e-commerce and non-shopping offline stores. It is expected that by 2023, this The channel model will constitute 80% of the company’s revenue.
GAP Group owns multiple brands, including GAP, Old Navy, Banana Republic and Athleta. It 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 online. Many American experts believe that consumer behavior changes will be permanent. Just after the announcement of GAP’s three-year reform plan, GAP Group’s share price rose by 14% that day, setting a 52-week high.
Currently, GAP is reassessing its business in Europe and may close GAP stores operating in the UK, France, Ireland and Italy at the end of the second quarter of 2021. In addition, GAP is also evaluating warehousing and distribution models, as well as GAP and Banana Republic’s e-commerce operations in Europe. An EU distribution center may be closed, and part of GAP’s business in Europe may be transferred to a third party in the form of a partner. . After GAP stated that it is conducting a strategic assessment of its European business and may close GAP stores operating in the UK, France, Ireland and Italy at 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.
Royal Bank of Canada Capital Markets raised its target price to $28, Barclays raised its target price to $27, and Telsey Advisory Group raised its target price to $23. All three companies saw the benefits of GAP’s downsizing plan by cutting unprofitable stores.
U.S. physical retail sales are bleak
According to a report by People’s Daily Online earlier, according to a report by accounting service company BDO USA LLP, the government forced temporary closures of stores and homes in the early stages of the epidemic The implementation of the order has exacerbated the plight of physical retailers. The report says consumers staying at home are buying more online products than ever before.
J.C. Penney Co. , Neiman Marcus Group Inc. , GNC Holdings Inc. And Brooks Brothers Inc. And other large retailers filed for bankruptcy protection this year, and each closed hundreds of stores. Since April, about 5,000 stores in the United States have closed forever, and only about 680 new stores opened in the same period. Nearly 2,200 retail stores closed in August alone, with only 14 newly opened.
According to data from Coresight Research, a global market research company, it is estimated that 25,000 US retail stores will continue to close. BDO said the high closing rate of physical stores is expected to continue. From January to mid-August, more than 10,000 physical retail stores in the United States closed, including Macy’s Macy’s and Bed BathBeyond Inc. And GAP Inc. Waiting for the company. Many shops that are about to go bankrupt are the main tenants of large shopping malls. Real estate research company Green Street Advisors LLC predicts that by the end of 2021, more than half of the mall department stores in the United States will be closed.
Compared with the excitement of online shopping platforms, traditional industries are covered by the storm of bankruptcy. S&P Global Market Intelligence statistics show that as of now, more than 500 large-scale companies have filed 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, in September, US commercial bankruptcy filings increased by 38% year-on-year to 3072, which is a year-on-year increase for 11 consecutive months. In September this year, commercial bankruptcy applications increased by 855 over the same period last year, an increase of 38%.
New York University Stern School of Business Emeritus Professor Edward Altman said that if such a high rate of bankruptcy is maintained in the future, by the end of this year, the number of US$1 billion or more bankrupt companies may reach 65. The previous high point during the 2009 economic crisis was 49, which will be broken this year.
The wave of bankruptcy affects not only the physical retail industry, but also traditional industries such as petroleum, aviation, and entertainment. Global Eagle Entertainment Inc., headquartered in West Chester. Filed for Chapter 11 bankruptcy protection on July 22. Global Hawk obtains non-theatrical distribution and music from Hollywood and international independent producers, while also providing travelers with satellite-based WiFi internet. In the bankruptcy filing, Christian Mezger, Chief Financial Officer of Global Hawk, said that because airlines and cruise partners have ceased operations or severely reduced operations, the company was “adversely affected by the new crown pneumonia epidemic” and had to file for bankruptcy.
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