Gap Inc. (NYSE:GPS) was one of the big movers, rallying by more than 13% after announcing plans to tweak its core business to focus on e-commerce. Investors pushed the stock past 52-week highs after the retailer announced plans to trim its store footprint to about 350 stores.
GAP Restructuring
As part of the ongoing restructuring, the apparel retailer is to close 30% of its Gap and banana republic stores in North America by 2023. The closure should allow the company to generate as much as 80% of its revenues from e-commerce and off-mall locations.
While the focus is on the North American business, Gap is also evaluating its operations abroad and could close some stores in Europe. According to the Chief Executive Officer, e-commerce should allow the company to return to profitable growth next year.
GAP E-Commerce Push
Focus on e-commerce does not surprise as Gap has come under immense pressure due to the COCVID-19 shocks. The pandemic has altered the shopping malls landscape as consumers opt to carry out shopping online and have goods delivered at the doorstep. With the epidemic not showing any signs of fading off, the company has had to respond to the changing retail environment.
In addition to focusing on e-commerce, the company has also had to diversify its product offering by pursuing sales in other areas. For instance, it has had to stock face masks to respond to the ever-growing demand. Face masks alone brought in close to $130 million in the last quarter.
In addition to face masks, activewear brand and Athleta have accounted for a huge share of total online sales. Likewise, online sales grew by 95% in the recent quarter, gaining 3.5 million customers. In response to growing online sales, Gap has already started converting many its stores to fulfillment centers to support the e-commerce spectacle.
In response to the COVUD-19 environment, GAP is also making changes to its brands. For instance, the banana republic brand, better known for dresses and suits, will not focus on activewear, sleepwear, and knits.