The discount clothing retailer announced plans to open about 800 stores, while other retailers are closing stores at a record pace. What are they thinking?
Old Navy plans to open more than 800 brick-and-mortar stores around the nation in a move that bucks the trend of national retailers shrinking their retail footprints.
After splitting off from its parent company, The Gap Inc., will increase its U.S. store count to roughly 2,000 locations.
Old Navy currently has 1,139 brick-and-mortar stores in North America, including 92 in Canada and 20 in Mexico.
The company plans to focus on opening smaller stores in underserved markets, seizing on its strategy of trendy, lower-priced clothing for a variety of demographics.
While chains that serve just teens or women or luxury shoppers are struggling, Old Navy's something-for-everyone approach has been working to boost foot traffic.
Old Navy reported $7.9 billion in net sales in 2018 with $1.6 billion of that attributed to online sales. The chain aims to expand its total sales to $10 billion in the near future.
The separation of Old Navy from Gap will allow Gap to pursue a strategy of focusing on its premium brands that fit into its long-term efforts to revitalize its image.
The separation should be complete in 2020 and Gap said it expects to incur between $700 million and $800 million in separation costs between 2019 and 2021.
Gap has closed hundreds of stores in recent years as retailers across the globe have been dealing with changing consumer habits and the rise of online shopping.
Clothing stores have been hit hard, as shoppers look for convenience and lower costs in shopping through the web.
Gap reported $8.7 billion in total sales for 2018 with about $2.1 billion coming from online sales when excluding Old Navy.
Through all of its various stores, Gap had 2,173 stores as of June 30, not counting Old Navy stores.