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Gap Is Shutting Down Its Hill City Brand

By Jennifer Saibil – Jun 9, 2020 at 11:00AM

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The retail apparel company has to make choices in the current environment.

It hasn't been a great year for Gap (GPS 9.22%), which had seen falling sales at most of its brands even before the COVID-19 pandemic. It's struggled to stay afloat and declined to pay rent to keep cash for other purposes, but it's had to make other cuts as well, and one of those is the fairly new Hill City brand, which which won't make it out of the pandemic.

Building off of success

Hill City was originally introduced in the fall of 2018 as a men's active apparel brand to mirror the success of Gap's women's activewear brand Athleta. Gap wanted to let Athleta focus only on the women's category and developed Hill City to meet the demand for a men's brand.

Exterior of Gap's Hill City store.

Image source: Gap.

Hill City was meant to compete in the direct-to-consumer menswear market and had an innovative model, which included pop-up shops and a mobile truck-store. 

Although Athleta had been growing even as the rest of the Gap brands saw declines, even Athleta sales were down 8% in the first quarter, which ended May 2. Online sales increased 49% during the period. Overall Gap sales decreased 43% and online sales increased 13% 

Making tough decisions

The company said that although it had to make the tough decision to close the brand, it would apply many of the designs and fits to other company brands, beginning with Banana Republic.

"We are living in unprecedented times with unprecedented consequences," brand head Noah Palmer said.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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