Gap, the US apparel giant, is making plans to exit the European market in 2021 due to the ongoing impact of the global pandemic. The company, which owns popular brands such as Gap, Banana Republic, Old Navy, and Athleta, will be closing its directly operated stores in Europe and instead focusing on maintaining a presence through franchise partnerships.

The closure of Gap stores in Europe is expected to take place in the second quarter of 2021, affecting countries such as France, the UK, Italy, and Ireland. A total of 129 stores will be shut down, with 80 of them located in the UK. In addition to store closures, Gap also plans to close its European distribution center in Rugby, UK.

To continue operating in the European market, Gap intends to shift its retail business model to franchise partnerships. This involves transferring parts of Gap’s European business to interested third parties. While Gap already operates around 400 franchised stores in 35 countries worldwide, the availability of potential partners in the current state of the ready-to-wear market remains uncertain.

Mark Breitbart, the global head of the Gap brand, expressed gratitude to the teams supporting the European business during this challenging time. In a video conference on October 20, he informed the staff about the company’s plans.

This is not the first time Gap has implemented a store-closure plan. In 2019, the company closed eight stores in France, resulting in the loss of 250 jobs. Currently, there are 19 Gap stores remaining in France, with 10 of them located in Paris. The French subsidiary employs nearly 500 individuals.

In an effort to streamline operations further, Gap announced in the summer of 2020 that it plans to close an additional 225 stores globally in 2021. The potential exit from the European market aligns with this broader strategy.

In response to the current crisis, Gap has borrowed $500 million. Global sales for the company decreased by 18% in the second quarter of the current financial year, with a significant drop of 48% in store sales. However, e-commerce revenue experienced a growth of 95% during the same period. In Europe, Gap sales declined by almost 50% year-over-year, falling from $131 million in Q2 2019 to $70 million in Q2 2020.

For more information on Gap’s store closure plan and the impact of the pandemic:

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AP News