Gap Inc. ($GPS) closing 189 Gap stores and decreasing Old Navy sf by +/- 5% by 2013

According to Sabrina L. Simmons, Chief Financial Officer (CFO), Executive Vice President of Finance, Principal Accounting Officer of Gap Inc. ($GPS) on their October 13, 2011 Shareholder/Analyst Call:

Given its importance, I’d like to spend a few minutes on real estate. Our primary objective for our North American divisions is to improve productivity of our square footage, not only through consolidations and closures at Gap’s specialty stores but also through downsizes at our Old Navy. These square footage reductions should increase productivity and allow us to shed rent and occupancy costs with the goal of ultimately making each box more profitable. In 2008, we set a goal to reduce North America square footage by about 10% by the end of 2012. We’ve made significant progress to date. Let me give you a few specifics.

At the end of 2007, Gap specialty had 1,056 stores on 10.3 million square feet. As of the end of the first half of 2011, Gap specialty is now at 889 stores and 9 million square feet, reductions of 16% and 12% respectively. By year-end 2013, our goal is to bring the Gap specialty fleet down to about 700 stores, which represents a full 34% reduction in the Gap North America specialty fleet since 2007. And we plan to supplement our healthier specialty store fleet with growth in our high productivity and high contribution outlet channel as we plan to add about 50 new outlet stores over the same period. By year-end 2013, we expect this rebalancing will bring our total Gap North America fleet to about 950 stores.

In contrast to Gap specialty, for Old Navy, the focus is on downsizes concurrent with remodels. And as we downsize our stores, our goal is to maintain the sales in a smaller box. At the end of 2007, Old Navy had approximately 20 million square feet. As of the end of the first half of 2011, with nearly the same number of stores, square footage has decreased by 8% to 18.5 million square feet. We believe there’s an opportunity to take out about another 1 million square feet by year-end 2013. Driven by these actions, through the end of the first half of ’11, we’ve reduced North America square footage by about 7%, on pace to achieve our goal.