‘We are facing a period of uncertainty’: Gap stops paying rent at North America stores

Gap Inc. said it’s future is uncertain as its brick-and-mortar stores are shuttered and demand for its clothing and fashion products plummets amid the coronavirus pandemic.The San Francisco-based clothing retailer that also owns Banana Republic and Old Navy is running out of cash and may not be able to continue operations without an infusion.As of Feb. 1, the company had $1.7 billion, and by the end of the fiscal quarter ending May 2, it expects to have $750 to $850 million in cash and cash equivalents, including short-term investments.An SEC filing posted Thursday reveals Gap stopped paying rent for its 2,785 North American retail stores in April, an expense totaling $155 million.In a March 30 statement, the company announced that it was furloughing the majority of its store employees in the United States and Canada, “pausing pay but continuing to offer applicable benefits until stores are able to reopen.”To further cut expenses, the company has said it will “reduce head count across its corporate functions around the world” and reduce pay for its leadership team and members of its board of directors. Gap may also permanently close some stores.Gap said if it doesn’t find more money in the next 12 months, it will be unable to fund operations.Video: Poll says most people who have lost jobs think they’ll return”We are facing a period of uncertainty regarding the ongoing impact of the COVID-19 pandemic on both our projected customer demand and supply chain,” a statement from Gap’s SEC filing reads.In response to the situation, Gap Inc. released a statement Friday on actions to further strengthen its financial liquidity and flexibility in response to the evolving impacts of COVID-19. “Not only did we successfully price the debt offering, but there was enough interest to increase the aggregate amount of the offering to $2.25 billion – a sign of strong demand for our securities, even now, the statement reads. “Importantly, we are setting up a capital structure that is designed to weather this storm and will enable us to focus solely on driving the business so we are positioned to come out on the other side ready to win.”The Associated Press contributed to this report.

Gap Inc. said it’s future is uncertain as its brick-and-mortar stores are shuttered and demand for its clothing and fashion products plummets amid the coronavirus pandemic.

The San Francisco-based clothing retailer that also owns Banana Republic and Old Navy is running out of cash and may not be able to continue operations without an infusion.

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As of Feb. 1, the company had $1.7 billion, and by the end of the fiscal quarter ending May 2, it expects to have $750 to $850 million in cash and cash equivalents, including short-term investments.

An SEC filing posted Thursday reveals Gap stopped paying rent for its 2,785 North American retail stores in April, an expense totaling $155 million.

In a March 30 statement, the company announced that it was furloughing the majority of its store employees in the United States and Canada, “pausing pay but continuing to offer applicable benefits until stores are able to reopen.”

To further cut expenses, the company has said it will “reduce head count across its corporate functions around the world” and reduce pay for its leadership team and members of its board of directors. Gap may also permanently close some stores.

Gap said if it doesn’t find more money in the next 12 months, it will be unable to fund operations.

Video: Poll says most people who have lost jobs think they’ll return

“We are facing a period of uncertainty regarding the ongoing impact of the COVID-19 pandemic on both our projected customer demand and supply chain,” a statement from Gap’s SEC filing reads.

In response to the situation, Gap Inc. released a statement Friday on actions to further strengthen its financial liquidity and flexibility in response to the evolving impacts of COVID-19. “Not only did we successfully price the debt offering, but there was enough interest to increase the aggregate amount of the offering to $2.25 billion – a sign of strong demand for our securities, even now, the statement reads. “Importantly, we are setting up a capital structure that is designed to weather this storm and will enable us to focus solely on driving the business so we are positioned to come out on the other side ready to win.”

The Associated Press contributed to this report.