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Gap Boosts Old Navy Investment With 60 New Stores In 2018

Gap Inc. is playing to its strengths by opening 60 new Old Navy stores and remodeling 150 existing locations. The additional Old Navy stores will push the discounted apparel brand’s store count above 1,000 units, according to CNBC. Gap operates approximately 3,500 stores worldwide under the Gap, Banana Republic and Athleta banners.

The Old Navy brand has been outperforming the namesake Gap brand. For Q4 2017, which ended March 1, 2018, global Old Navy comp store sales were up 9%, while Gap sales were flat and Banana Republic sales were up only 1%. For the full fiscal year, Old Navy comp store sales were up 6%, while Gap sales fell 1% and Banana Republic sales dropped 2%.

While Gap puts more resources behind Old Navy, the retailer is closing Gap and Banana Republic stores as part of a growth strategy revealed in September 2017 that called for shuttering approximately 200 of these locations by 2020.

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“If you think about it, the real estate we have exited tends to be clustered at some of the older malls that the customer isn’t as excited about anymore,” Gap CEO Art Peck told CNBC. “We’ve moved to where the customer is,” meaning more open-air centers and street-level retail.

The retailer will be remodeling approximately 150 Old Navy stores in coming months, with 10% of these stores receiving a full makeover.

In addition to sprucing up its stores, Gap is investing in upgrades to its mobile apps, allowing shoppers to check available stock in stores, quickly browse customer reviews and keep track of their loyalty points. The retailer also is testing buy online/pick up in-store in a few locations, according to CNBC.

Gap has struggled with external competitors as well as internal competition from Old Navy, which generates 70% of the parent retailer’s profits on only half of its total sales, according to Fortune. Gap Brand President and CEO Jeff Kirwan left the company in February amid challenges around the brand’s growth and profitability.

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