No more fish and chips for Banana Republic.
Gap Inc. said its higher-end brand would close its eight stores in the U.K. as part of an effort laid out in May to place its retail bets in markets that offer significant growth.
“After a thorough evaluation process, the company has decided to close eight Banana Republic stores in the United Kingdom,” a Gap spokeswoman said. “The company anticipates that the majority of the stores will close by the end of fiscal year 2016. Banana Republic will continue to serve customers in the United Kingdom through http://www.bananarepublic.co.uk.”
She said Banana Republic continues to have more than 650 company-operated stores in North America, Japan and Europe, over 100 franchise-operated stores in more than 20 countries globally and a web presence in 90 countries.
Rents are generally higher in international markets for U.S. retailers and it requires significant investment to build brand awareness abroad.
In May, Sabrina Simmons, Gap Inc.’s chief financial officer and executive vice president, told Wall Street analysts that, “We’re committed to focusing the business to gain market share in key strategic markets, where we believe we are structurally advantaged and/or where there’s significant runway for growth.”
With that thinking in mind, she said the company would wind down its 53-door Old Navy business in Japan this year in addition to closing “a number of dilutive Banana Republic stores, primarily internationally.”
Ike Boruchow, a retail analyst at Wells Fargo, said Banana Republic has been struggling for the last two years.
“It’s been a lot of change on the design side and being an apparel retailer in general has just been tougher and tougher,” he said, noting the company appeared to be “reining in the riskier part of their profile” and “allocating resources where they actually see growth and see potential to take market share.”
Banana Republic’s comparable-store sales last month fell 9 percent, or 6 percent excluding the impact of a fire at its Fishkill, N.Y., distribution facility.