Gap (NYSE:GPS), an apparel retailer, said it would close 175 namesake stores, about a quarter of its North American locations, over the next few years as part of a comeback plan for the business.
The company will shutter 140 of the stores before the end of the fiscal year in January, the San Francisco, California-based company said in a statement late yesterday. When complete, the cutbacks will leave the brand with 500 full-price stores and 300 outlet locations in the region.
The retailer, which operates Gap, Old Navy and Athleta stores, also is eliminating 250 corporate jobs as part of the move. As of January, Gap employed about 141,000 people globally, according to its financial filings.
Gap estimates an annualized sales loss of about $300 million associated with the store closures. It will also take a one-time cost of up to $160 million.
The company will operate about 800 stores in North America after the restructuring.
Shares gained 1.3 percent to $38.68 at 2:57 p.m. in New York, paring this year’s slump to 8.4 percent.
Gap has been struggling with falling sales as it competes with the likes of Europe's H&M and Zara. The brand has been criticized for not including enough color, or having the right fit, in its assortment. Gap reported dismal sales for the first quarter of 2015, down 10 percent from last year. Its online sales were also down 2 percent from the same period last year. The company recently shut down its Piperlime branch, which curated shoes and clothing from other brands and was sold primarily online.
"Returning Gap brand to growth has been the top priority since my appointment four months ago," chief executive officer Art Peck said in the statement.
"Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers," he added.
This is the second round of Gap store closures. The company said in 2011 it would shutter 21 percent of its North American stores.
Separately, Gap reaffirmed its previous full-year earnings guidance of between $2.75 a share and $2.80 a share.