American fashion giant Gap is reportedly in a face off with its landlords after informing them of plans to close all of its stores in the UK in July 2021, resulting in the loss of hundreds of jobs.
According to The Times, property sources have said that Gap had offered landlords to pay reduced rent until July, whilst also pressuring landlords to break lease contracts early.
The company said in October that it was considering repositioning the business in Europe to a franchise-only model, with more high street shops at risk of going out of business as the Coronavirus pandemic continues to hurt retailers with restrictions, social distancing and behavioural changes directly impacting footfall.
Gap has 70 company operated stores in the UK (it has already been reducing its footprint in the UK via store closures). It also has 158 franchised stores across Europe.
In December, TheIndustry.fashion announced that the company was close one of its two stores at London’s iconic Oxford Street, with closing down sale signs on display in the store’s window.
According to Companies House documents for the year 1 February 2019 – 1 February 2020, Gap’s UK division reported £3.27 million of impairment charges on underperforming stores, with sales falling 9.5% to £195.1 million and producing an operating losses of £40.7 million.
Original reports in October suggested that regarding Gap’s e-commerce fulfilment centre in Rugby would also close, however no negotiation or decision on the matter has been confirmed.
“As we conduct the review, we will look at transferring elements of the business to interested third parties as part of a proposed partnership model expansion.” Mark Breitbard, Gap Head of Global Operations, commented last year.
“Franchise partnerships are a strong and cost-effective way to amplify the brand. Through franchise, Gap brand reaches customers in 35 countries with more than 400 stores and 14 e-commerce sites.”
TheIndustry.fashion has published an analysis, looking at why Britain fall out of love with Gap.