Gap is going to file for bankruptcy.
That might sound like a bold, even reckless prediction. But given Gap’s downward spiral, the San Francisco apparel giant will not survive without a radical restructuring only made possible by U.S. Bankruptcy Court.
Put simply: The company’s business model is irreparably broken.
Gap still enjoys considerable financial resources, so it can delay the inevitable, perhaps for a few years. But it has crossed an unfortunate threshold that even if the retailer manages to revitalize its product line — a big if — the challenges that Gap faces both internally and industry-wide make a comeback highly unlikely.
“Gap Inc. is committed to maintaining a fiscally disciplined approach in the pursuit of transforming our business,” Gap spokeswoman Jennifer Poppers said. “We have a strong balance sheet, healthy free cash flow, and we make prudent financial policy decisions.”