Gap Inc. announces layoffs and store closings

SAN FRANCISCO (KTVU) - Employees leaving The Gap corporate headquarters in San Francisco said they didn't see any packing boxes or pink slips in the office Monday following the announcement that the retail clothing giant intends to save $25 million per year by closing 140 Gap stores this fiscal year and 35 more in following years.

A Gap spokesman told KTVU that the 250 corporate layoffs would be spread among offices nationwide from San Francisco to New York. A list of which stores will be closed has not been released and the company did not say whether employees at those stores would be laid off

Since the launch of The Gap in 1969, the company has built its brand on basics.

"Casual's kind of your go to store," said Hilary Brainard of San Francisco, who was shopping along Market Street.

"Jeans, lots of jeans. I have lots of Gap jeans and just basics. When I go to Gap I think classic but cool," said another shopper Janna Toste of San Francisco.

"I love The Gap. The windows are amazing this year," said Brent Wilson, North Carolina, "I have some really great old Gap clothes like from 20 years ago. Really amazing pieces of clothing."

Some consumers say The Gap is lagging behind the times.

"I think it's changed a lot. Used to be really good," said Susan Peoples of Santa Cruz.

"Basically everything's the same color, grey, grey, grey, grey, grey...khaki, all khaki," said Sassy Berry, a San Francisco shopper.

"It used to be the place to go to get really good clothes. You knew you'd find something great at the Gap. Now it's not," said Gina Wheeler of Aptos, who said she prefers to shop at smaller boutique stores now.

Gap officials say the cuts and store closures are intended to increase productivity and profitability.

At The Gap corporate headquarters on Folsom Street employees wouldn't talk on camera, but some told us they got the word in an email from the CEO Art Peck, who took the helm in February.

"Their physical footprint was huge, massive. And they had all these stores in dying malls. They had to get rid of them," said Kit Yarrow, a professor of consumer psychology at Golden Gate University.

Yarrow also says The Gap has not kept up with changes in how consumers shop.

"If they're just buying staples, which is what Gap was known for, they'll buy them online. The reason they'll go into a store is to be inspired by a new design, a new collection, new colors, something that's only going to be there for a few weeks," Yarrow said.

The cuts do not affect The Gap's other lines Old Navy and Banana Republic or Gap outlet stores. Gap Global President Jeff Kirwan told The Associated Press that the company will apply lessons it's learned from its Old Navy brand, which has been a bright spot, to Gap.

A shareholders meeting is scheduled Tuesday at the headquarters.