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Gap to Shutter UK Stores, But Analyst Sees Kanye as a $1B Opportunity for the Brand

Gap is preparing to close all 81 of its stores across the United Kingdom and Ireland as it retools its European business.

The retailer will begin shuttering doors at the end of August and complete the process by the end of September, it announced Wednesday.

“We are thoughtfully moving through the consultation process with our European team, and we will provide support and transition assistance for our colleagues as we look to wind down stores,” Gap said in a statement.

The company made an effort to paint the closures in a positive light, focusing on the upward trajectory of its online sales in the region. “The e-commerce business continues to grow and we want to meet our customers where they are shopping. We’re becoming a digital-first business and we’re looking for a partner to help drive our online business,” it said.

The news follows Gap’s announcement in October that it will eliminate 350 Gap and Banana Republic stores in North America — or about 30% of its total fleet — by the end of 2023, looking to e-commerce and off-mall stores such as outlets and strip malls for future growth.

Gap’s namesake line has struggled for years with growth and profitability due to discounting, expensive leases and lack of differentiation in a crowded market. However, its forthcoming collaboration with Kanye West’s Yeezy brand could be a wildcard. A new analysis by Wells Fargo forecasts that the collection could drive up to $990 million in incremental sales for Gap in fiscal 2022 and raise the company’s share price by about 50 cents per share, according to a note sent to clients.

The investment bank landed on that estimate following a survey it conducted with the data research company Guidepoint. The survey asked 530 Gap shoppers and 470 non-Gap customers (all of whom were familiar with Kanye West) about their intentions around shopping the Yeezy Gap line.

64% of Gap customers said they planned to purchase Yeezy products, estimating they would spend an incremental $178 on average in the collaboration’s first year. Among non-Gap customers, 23% said they would shop the collaboration and expected to spend an incremental $126 at the retailer.

Last month, Gap revealed the first product from the collaboration: a $200 bright blue unisex puffer jacket, which quickly sold out of pre-orders online. The remainder of the buzzy collaboration — which includes men’s, women’s and children’s apparel, though no footwear — is set to be released later this year.

Not all analysts are quite as bullish on the tie-up, however: The NPD Group’s senior sports industry advisor Matt Powell tweeted out a link to a story on Wells Fargo’s $1 billion forecast with one word: “Naw.” Powell has previously expressed skepticism about Yeezy’s longterm market power, pointing to the brand’s over-reliance on the resale market and move to mass production in a world where exclusivity is king.

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