Gap to contract in U.S., expand in China

Gap Inc. plans to close stores in the United States while expanding in China.

The retailer, which runs the Gap, Old Navy and Banana Republic chains, said Thursday it plans to close 189 locations, or 21 percent of its Gap stores in the United States, by the end of 2013. At the same time, the largest U.S. clothing chain said it plans to triple the number of Gap stores in China from about 15 by year's end to about 45 in 2012.

The moves are related to the company's previously stated goal of reducing its overall U.S. square footage while roughly doubling revenue from abroad.

As for Gap's plans for its Long Island stores, a representative didn't reply directly but sent a general statement from Art Peck, president of Gap North America, saying that some U.S. Gap stores located in malls for decades "are tired and worn out," and that the company will "determine which stores meet the standards we've set for our brand."

Glenn Murphy, Gap's chief executive, said in a statement, "We're well positioned for sustained growth across the business."

Like many U.S. companies, Gap has been looking overseas for growth as Americans continue to cut back on spending during the down economy. But even before the U.S. economy took a turn for the worse, Gap lost some of its fashion edge.

Its sales in the U.S. have eroded considerably since the 1990s because of growing competition from specialty retailers like Abercrombie & Fitch and cheap-chic merchants like H&M.

In the second quarter Gap's overall revenue at stores opened at least a year -- a measure of a retailer's health -- fell 2 percent during the quarter. At Gap's namesake brand in North America, which has posted an annual revenue drop for the last six years, revenue for the quarter was down 3 percent.

Banana Republic, which focuses on dressy casual styles for work, posted a 2 percent decline. North American revenue at Old Navy, which sells low-priced clothing, was flat.

The company, based in San Francisco, has been trying to shore up its business, including shaking up senior management by bringing in a new brand president, chief marketing officer, Gap design director and ad agency. Gap also established a Global Creative Center and consolidated its marketing in New York. -- With Keiko Morris