Gap Responds to Rumors

The Gap recently announced that reports about its closing 18 Manhattan stores were unconfirmed, and “blown out of proportion.” The action, if true, would only be a common retail practice.

The rumor first surfaced in Crain's New York Business, and was reported on the VM+SD web site on April 10. The San Francisco-based retailer of more than 3700 stores retorted that closing smaller stores and re-opening others in nearby locations is a common practice for the retailer. What's more, The Gap statement said, the Crain's story also buried the fact that the company intends to grow its New York store base by 18 percent this year.

“The whole premise of this seems to be that the economy is bad and we're running for cover,” said Jack Dougherty, a Gap Inc. spokesman. “The reality is we open and close stores every day. The economy is in a tough place, particularly for retailers, and we have some folks that are determined to make some conclusions about our closures in New York and the economy, and they're just not linked.”

Dougherty said he would not confirm that the eight Manhattan locations were actually slated for closure, but he did say that the company has plans to close some (less than eight) New York stores this year.

It is not uncommon, Dougherty said, for The Gap to close small neighborhood stores when the leases expire, particularly when it has plans to open a larger more expansive store only a few blocks away. As an example, he cited the recent closing of two 3000-square-foot stores — one Gap and one Gap Kids — at New York's Pier 17 near the South Street Seaport last fall. The closures were closely followed by the opening of a new 20,000-square-foot Gap store less than a block away that incorporated both Gap and Gap Kids, as well as Gap Baby and Gap Body. In New York, Gap has stores as small as 2000 square feet and some as large as 57,000 square feet, such as the Gap store in Herald Square.

“We've had a real estate strategy in place that's been evolving over the past four or five years,” Gap's Dougherty said. “We're trying to do more with less, so we're adding square footage but we're operating in fewer buildings.”

The company did confirm that it was expanding the Gap store at 18th Street and Fifth Avenue in New York to 28,5000 square feet from the current 23,000 square feet, as well as expanding its Times Square store to 35,000 square feet from 15,000 square feet.

In early March, Gap had said its 2001 expansion plans called for growth of about 17 to 20 percent, with that number diminishing slightly to 15 percent in 2002 and 2003. Dougherty said Gap has not changed that plan. As of March 3, 2001, Gap operated 3740 stores, compared to 3058 as of Feb. 26, 2000, an increase of 22 percent. And even if they were to close the eight Manhattan stores, as rumored, analysts agreed it would be a mere drop in the bucket. “Gap has a lot of stores,” said one. “Eight stores is not a huge impact on its store base.”