US clothing retailer Gap has plunged almost $1bn into the red in just three months, after it had to close the vast majority of its stores worldwide during the coronavirus shutdown.
The company, based in San Francisco, made a loss of $932m (£738m) in the three months to 2 May, compared with a profit of $227m during the same period in 2019.
The retailer, known for its denim, chinos and T-shirts, wrote off $235m for excess stock.
Like many of its competitors, Gap has been left with mountains of seasonal clothing it has not been able to sell, while 90% of its global stores were temporarily forced to close during lockdown.
The Gap group, which also owns the Old Navy and Banana Republic brands, said customers were focused on buying casual clothes while staying at home, affecting sales at Banana Republic, which offers more workwear.
Gap has almost 2,800 stores in North America and has now reopened 55% of its company operated stores in the region. It hopes to reopen most of the rest throughout June.
A range of retailers will be permitted to reopen in England from 15 June, provided they install physical-distancing measures inside stores.
The UK operations of of US lingerie chain Victoria’s Secret collapsed into administration on Friday. No immediate store closures or job losses are planned while a buyer is sought. There are 25 Victoria’s Secret stores in Britain, which employ 800 staff, and almost all have been furloughed during the lockdown. The chain lost £170m in 2019.
Rob Harding, joint administrator at Deloitte, called the firm’s collapse “yet another blow to the UK high street”, adding it was “a further example of the impact the Covid-19 pandemic is having on the entire retail industry”.
L Brands, the US parent company, posted a near-$270m net loss over the most recent three months as sales slid 37%.
Gap’s chief executive, Sonia Syngal, said the retailer’s online sales doubled in Mayand she was optimistic for long-term growth.
The retailer said it would close some Gap and Banana Republic branches while also seeking rent concessions.
It paid no rent for closed stores in April, extended its payment terms to suppliers and deferred its first-quarter dividend as it sought to cut costs and preserve cash.
Gap is being sued by the largest shopping mall operator in America for unpaid rent during the coronavirus shutdown.
Simon Property Group, which counts Gap as one of its biggest tenants, filed a lawsuit on Thursday, accusing Gap of failing to pay almost $66m in rent and charges while its stores were closed.
Commercial property landlords in the the UK have been temporarily banned by the government from taking legal action against tenants who refuse to pay their rent until 30 June.