"We will be very selective going forward on new store openings in the North American market," said Glenn Murphy, chairman and CEO. "With 40 million sf of space, the real growth is in reducing the size of the points of distribution rather than the number of points of distribution."
Excluding 15 store repositions, the company expects to open about 100 store locations and close about 85 stores (weighted toward Gap units) this year. In 2007, the company opened 214 stores and closed 178 units, for a total of 3,167 stores at the end of the fiscal year. The overall real estate strategy determining the most efficient store sizes will be completed by the summer.
Growth, he continued, will be on the international and franchise front, with most new stores opening in those divisions beyond 2008. Of the 100 new stores opening this year, 35 will be in the international division. The first Banana Republic in the United Kingdom will open shortly, with four more units to open this year.
Gap remodels will remain the same as last year, with about 70 to 75 stores. But remodels of Old Navy units will decline dramatically as the chain reassesses the format.
"Fourteen years into the brand's life, we believe it is time to evolve the store's format," said Sabrina Simmons, executive VP and CFO.
For the fourth quarter, earnings were $265 million, compared with $219 million the previous year. Sales for the 13 weeks ended February 2, 2008 were $4.7 billion, down from $4.9 billion the previous year. Comparable-store sales decreased 3%.
For the year, net sales were $15.8 billion, down from $15.9 billion the prior year (a 53-week year). Comparable store sales decreased 4% percent. However, online sales for the fiscal year rose 24% over the previous year to $903 million.
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