• The Wall Street Journal, Wednesday, June 11, 2008 12 PM

Struggling with sluggish sales across all its brands, Gap Inc. plans to close a handful of small stand-alone GapBody, GapKids and babyGap stores and consolidate offerings in its namesake stores to reduce square footage and boost earnings.

"Having kids, baby, maternity, body, and adult in the same box makes sense," says CEO Glenn Murphy. "Today it's very clear to us this brand has got to come back together." By combining a 10,000-square-foot Gap adult and body store with a 5,000-square-foot kids-only store, Gap could save $225,000 a year in rent alone, he says.

The San Francisco-based apparel retailer's new real-estate strategy also involves figuring out which of its 3,100 stores to reposition, relocate, remodel and "right size." Murphy also says the company will begin testing a new system at its Old Navy chain that will help it better align inventory with purchasing patterns at each store.

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