Gap started the Forth & Towne concept with the aim of attracting women seeking a "chic, grown-up style" in their clothing. The company said that it was "encouraged by the initial performance of Forth & Towne," but it could not sustain the new brand in light of its failure to deliver acceptable long-term returns and the company's need to turn around its other lines of business.

Instead, Gap has concluded that "future investments should be focused on turning around its Gap and Old Navy brands as well as supporting other growth initiatives that have greater potential of creating shareholder value." Bob Fisher, Gap Inc.'s chairman of the board and interim president and CEO, called the Forth & Towne format "a test of a promising concept and an illustration of the innovative risks you need to take in our business."

The 19 Forth & Towne stores are located in 10 US markets. The company anticipates that the pre-tax expenses associated with the closing of the stores will be approximately $40 million, which will be recognized primarily over the first and second quarters of fiscal year 2007.The closure will impact about 550 employees, and Gap Inc. is looking at ways to redeploy them to positions in its Gap, Banana Republic and Old Navy brands.