Gap Inc, which has felt the pressure of the coronavirus with slumping sales, is looking to preserve cash amid the pandemic,” Yahoo Finance reported. The retailer said it had $2.2 billion in cash and cash equivalents as of the second quarter of 2020 and reported an 18% year-over-year net sales decline, which was driven by COVID-19-related store closures for the same timeframe.
Mark Breitbard, head of Gap Brand Global, made the announcement on Tuesday, saying that the company was “starting a strategic review of options for our Gap business in Europe.” Breitbard said at the time that the evaluation could include the closure of company-operated stores located in the U.K., France, Ireland, and Italy by the second quarter of 2021.
“We are committed to sharing more as we thoughtfully work through this process,” Breitbard, said in a statement. “While the work is tough, we have our eyes set on leveraging our brand power to deliver Modern American Optimism to customers around the world.”
Breitbard also said Gap Inc. was reviewing the warehouse and distribution model of its Gap and Banana Republic company-owned e-commerce operations in Europe, which could include the closure of its EU distribution center in Rugby, U.K.
Beyond the store closures, Gap Inc. is looking to overhaul its business model in Europe by forming partnerships through an expansion of its third-party franchising structure. To date, the Gap brand reaches 35 countries with 400 stores and 14-e-commerce sites through franchisees.
Gap has been saddled with lagging sales and an influx of inventory that shoppers have deemed out-of-fashion as its stores were closed during the pandemic, Yahoo Finance said. Since reopening stores, Gap has not seen sales rebound as consumers shift to online purchases instead of brick-and-mortar store shopping, the news outlet said.
However, Gap Inc. has seen the Old Navy and Athleta brands sales increase during the pandemic as consumers shift to casualwear. The retailer reported a comparable sales increase of 24% at Old Navy and a 19% increase in comparable sales at Athleta.
Shares of Gap Inc. stock were trading at $18.66 as of 12:16 p.m. EDT, down 37 cents or 1.97%.