Gap to reduce store size
Gap is looking to reduce the amount of space it leases in some malls, as an effort to cut back on its rental expenses. The company has had declining revenues for three of the last four quarters. According to Glenn Murphy, CEO of Gap, the retailer is considering the 40 million sq ft that it leases as an asset rather than a cost, stating that “How are we going to monetize it and maximize it to make sure we can get the P&L (profit and loss) benefit by doing the work that needs to be done on this 40 million square feet?”
The company is likely to reduce the size of its stores so that it can save its rent, and will also combine some of its stores for kids and babies into the original Gap store for adults. Admitting that the company “got carried away because we were doing so well”, Murphy said that they necessarily did not need such large stores. He added that the benefits of the reduction in real estate space will not come into effect till 2009.