Gap is closing a bunch of stores and says layoffs might be coming (GPS)

Mallory Schlossberg/Business Insider

Gap is closing a bunch of stores and could lay off workers soon amid declining sales.

In its first-quarter earnings results on Thursday, the clothing retailer said that it is closing up to 75 Banana Republic stores.

It's also closing all of its 53 Old Navy stores in Japan as part of a shift to markets, in North America and China, where the brand is most popular and the potential for growth is greatest.

Gap expects to achieve $275 million in annual pre-tax savings through these closures.

Bloomberg reported that Gap could lay off staff, mostly at its headquarters, as part of a restructuring process.

The retailer reported adjusted earnings per share of $0.32 and revenues of $3.44 billion, in line with forecasts.

Same-store sales — at locations open for at least one year — fell 5%. They were forecast at -7%.

Like other department stores, Gap's sales have been getting slammed by declining foot traffic. During the first quarter, global Gap sales fell 3%, Banana Republic sales dropped 11%, and Old Navy sales were down 6%.

The company reported weaker-than-expected monthly sales again in April, signaling that its turnaround strategy is still not gaining the expected traction.

Last June, CEO Art Peck said that the catalyst for sales growth was putting better clothes in its stores.

Gap shares rallied as much as 3% in after-hours trading. They've fallen 30% this year.

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