Losses ballooned at Gap ahead of decision to close stores

Pretax losses last year ballooned more than nine-fold to €2.45 million at the Irish arm of Gap ahead of the closure of the US chain’s Irish stores.

New accounts lodged by Gap Stores (Ireland) Ltd show the business recorded the sharp increase in pretax losses after revenues slumped by 46 per cent or €5.85 million from €12.69 million to €6.84 million in the 12 months to the end of January 31st this year.

The firm’s pretax loss takes account of non-cash impairment costs of €436,116 during the year.

On June 30th last, Gap said that despite discussions with potential partners, "the Republic of Ireland market dynamics were too challenging" and it was closing company-operated stores from the end of August to the end of September this year. All five trading locations have since been shuttered, with four surrendered to the landlord and discussions continuing for the surrender of the remaining site.

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Directors noted that last year’s revenue decline was due to the impact of the Covid-19 pandemic.

Gap is to become a digital-first business in the Irish market, partnering with Next as a joint venture online business to drive growth. "Opportunities will continue to be sought to improve profitability and market share in the Irish apparel market," directors said in the accounts.

Gap employed 117 at the end of January last, with the company pledging to “thoughtfully move through the consultation process and provide support and transition assistance for employees as the stores wind down”.

Wage supports

Staff costs last year reduced by 30.5 per cent from €2.06 million to €1.43 million. The company received €129,891 in Government Covid-19 wage supports.

At the end of January last the company had a deficit of €1.5 million in its shareholder funds. The company’s cash funds reduced from €1.24 million to €906,983, while the wider Gap group had $2.06 billion (€1.8bn) in cash at the end of January last.

Directors said the parent would continue to support its Irish entity to enable the company to fund all costs associated with the winding down of the business, including all store closure costs and any remaining third-party relationships.