The Gap will close its Fifth Avenue store in New York
Posted December 26, 2018 3:28 p.m. EST
(CNN) — The Gap is closing its Fifth Avenue store in New York as part of a plan to rebound from slowing sales.
The location will close on January 20, the company confirmed. The New York Post first reported Gap's plans.
The closure on New York's tony Fifth Avenue is another sign of Gap's woes.
The Gap was the coolest brand in retail two decades ago. It rode the mall boom in the back-half of the 20th century and won over everyone from teens to moms to celebrities like Sharon Stone.
But the Gap (GPS) has struggled in recent years, yet at the beginning of November still had more than 1,000 stores around the world and nearly 800 stores in North America.
Gap CEO Art Peck acknowledged in November that its current store count was unprofitable, and he sketched out plans to quickly close hundreds of them.
Closing stores, which he called "overdue," could save Gap up to $100 million in profit and strengthen healthier stores.
"We have had a lot of stores that are in the bottom half of the fleet that have continued to deteriorate over time," Peck told analysts. "It's my strong belief that we've kicked the can down the road on this and offered a deteriorating customer experience, and it does have a negative effect on the health of the brand."
The brand built its status on selling logoed sweatshirts, turtlenecks, and fashion basics for premium prices, but that model is under threat with more choices in the market than ever before. Gap has been undercut by fast-fashion sellers and missed out on the athleisure boom.
In its latest quarter, Gap's sales slid 7% compared to a year ago. Gap also owns Old Navy, Banana Republic, and Athleta, which are in stronger shape.
Sales at Old Navy, Gap's largest brand, grew 4% last quarter. Old Navy is building new stores and will reach $10 billion in sales in the coming years. Gap's women's athleisure chain Athleta is expanding too, and the company expects it to hit $1 billion in sales. Earlier this year, Gap introduced an athleisure brand for men called Hill City.
Retailers have closed more than 5,400 stores in the United States this year, according to retail think tank Coresight Research. Toys "R" Us closed 881 stores during its liquidation, Sears and KMart has shut 472, and Mattress Firm has shut 388. Mattress Firm filed for bankruptcy in October.
But closures slowed down this year from a record pace in 2017. Retailers closed around 7,000 stores last year.
Dollar and discount stores are opening thousands of stores as consumers look for bargains. Dollar General has opened 900 this year, according to Coresight. Dollar General (DG) believes it can open up to 13,000 more around the country. Five Below (FIVE), which sells most of its stuff to kids for under $5, has opened 200 stores.