Gap Laying Off Workers, Closing a Quarter of Its Stores Nationwide

New Gap CEO Art Peck is paring down the San Francisco company’s namesake retail chain, announcing Monday that Gap will close more than a quarter of its namesake stores and lay off 250 workers.

“Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Peck said in Monday’s announcement.

Gap will close 175 of its 675 Gap stores nationwide, with about 140 expected to occur in the current fiscal year; Gap’s 300 outlet stores will stay open, and a limited number of European locations will close, the company announced. After the reduction, Gap expects to have about 1,600 locations worldwide.

In addition to any employees let go as a result of the closures, Gap plans to lay off 250 office workers in “the brand’s headquarter workforce.” When asked for clarification, a Gap spokeswoman said that the layoffs would not all be occurring in the company’s San Francisco headquarters.

“The headquarter role eliminations are primarily in Gap’s North America offices, including places like New York and San Francisco, but also across its Upper Field Leadership, which are based across the country,” Liz Nunan wrote in an email.

Gap lists 141,000 workers, but the vast majority of those are employed at the company’s retail outlets. Nunan said Gap would not disclose how many store employees would be affected by the closures, and Gap did not announce the particular stores that are closing.

“These decisions are very difficult, knowing they will affect a number of our valued employees, but we are confident they are necessary to help create a winning future for our employees, our customers and our shareholders,” Jeff Kirwan, global president for the Gap brand, said in the announcement.

Revenues grew 1.8 percent to $16.44 billion for Gap in 2014, but profits fell 1.4 percent to $1.28 billion. Those results include sales at all Gap chains, including Banana Republic and Old Navy; net sales at Gap-branded stores declined 5 percent worldwide in 2014, including outlet stores.

Brian Sozzi, who analyzes the retail industry as CEO and chief equities analyst of Belus Capital Advisors, called the store reduction “disturbing” Monday.

“I am concerned on how Gap will address growing order online, ship from store demands with 100+ fewer stores,” Sozzi tweeted.

Peck — who previously led Gap’s online efforts — became CEO of the company at the beginning of its new fiscal year, on Feb. 1. He plans to meet with investors at the company’s San Francisco headquarters on Tuesday morning as part of a previously planned Investor Day, with Kerwin also scheduled to participate.

On Monday, Gap shares fell 8 cents to $38.19 in regular trading. In aftermarket trading, the shares rose 50 cents to $38.69.