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Gap considering a change to franchising throughout Europe

Gap considering a change to franchising throughout Europe

The clothing retailer may close hundreds of its European stores, in order to bolster its franchise footprint.

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Gap, which currently operates more than 400 franchised stores throughout 35 countries, is considering switching a large proportion of its European portfolio to a franchising model. This could result in the closure of existing sites, including its distribution center in Rugby; putting up to 3,000 U.K. jobs at risk, according to the Financial Times.

In a statement released on the Gap website, Mark Breitbard, head of Gap Brands Global, explained what the organization could look like moving forward: “Today, we shared with our team that we are starting a strategic review of options for our Gap business in Europe,” he said.

“One of the options being explored is the possible closure of our company-operated Gap stores in the United Kingdom, France, Ireland, and Italy at the end of the second quarter in 2021. In addition, we are reviewing our warehouse and distribution model and our Gap and Banana Republic company-owned e-commerce operations in Europe. A possible outcome is the closure of our EU distribution center in Rugby.”

Gap first entered the U.K. back in 1987, and its 70 owned stores in the country represent more than half of the brand’s European footprint. In the most recent financial quarter, however, Gap reported a $62m net loss. Banana Republic, an upmarket brand owned by the organization, closed all of its European stores two years ago.

A reduction of Gap’s physical presence isn’t new, with the organization’s global footprint down from 3,709 sites five years ago, to around 3,345 in February 2020.

“Gap has what it takes to win again,” said Mark Breitbard. “With strong brand awareness and a large, active customer base, we are focusing on harnessing the power of Gap brand in asset-light ways. Going forward, we will look to transform our business model through partnerships that grow and amplify our global reach.”

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