NEW YORK ( TheStreet) -- Gap (GPS) is planning to shut down 175 of its stores in North America, and cut 250 jobs at its headquarters. The closures will leave the retailer with around 800 North American locations, including 300 outlet stores. No outlet stores are slated to be closed.
The San Francisco-based clothing retailer, which also owns the Old Navy and Banana Republic chains, will close an as-yet undisclosed number of its European Gap stores this year as well. Investors are hoping that the cuts will make the retailer more nimble. Gap has been struggling to keep up with the latest fashion trends, losing its appeal among younger shoppers. The clean-cut "basics" it features that were wardrobe staples in the '80s and '90s have fallen out of favor, with today's shoppers gravitating towards more individual and statement designs.
Gap has also faced intense competition from low-priced retailers such as Forever21 and Uniqlo, which have done a better job of getting millennial shoppers excited about their latest lines and designer collaborations.
The store closures will occur in tandem with a management shakeup as Gap attempts a brand overhaul. Both Banana Republic and Old Navy have also seen recent management changes. Gap expects its cuts to save it around $25 million a year. The company said it does not expect the closures to affect its other brands. Arthur Peck, who took on the CEO role back in February, was downbeat on the company's May earnings call, telling investors: "I continue to be disappointed, but not surprised by Gap's performance. We have had a women's business challenge now for several seasons running. I believe we have diagnosed it correctly having to do with being off-brand, in some cases off-trend, and I can promise you that the team is all over it."
Old Navy has been the bright spot for Gap, as customers have gravitated towards its lower priced goods.