(Image Source: CNBC)
Gap Inc. shares shot up by 14% after they announced their plans to close 350 physical stores and shift to a new business model driven by e-commerce and off-mall locations.
The retail company is expecting to close 30% of Gap and Banana Republic stores in North America by the end of 2023, and generate 80% of its revenue from e-commerce and off-mall locations. Gap hopes to return to profitability in 2021 with this shift in focus.
Gap, along with other retail brands, has suffered during the COVID-19 pandemic. During this time, the company has turned to alternatives to drive sales, including making face masks and turning some stores into online fulfillment centers. Its face masks alone brought in $130 million in sales last quarter.
On the other hand, Athleta, an activewear brand under Gap Inc., was the only brand within Gap to report an overall increase in sales. In the second quarter alone, Athleta’s online sales grew by 95% and it had gained 3.5 million new customers. In June, the brand announced a deal with Kanye West to launch an exclusive fashion line which caused stock prices to soar.