About 175 underperforming Gap stores will close in North America as part of a comeback plan for the business, which has posted sales declines for five straight quarters and lagged behind its sister chain Old Navy.

Gap Inc. is eliminating 250 corporate jobs as part of the move, according to a statement Monday from the San Francisco- based retailer. The company will close 140 of the stores before the end of the fiscal year in January, with the rest coming later. The cutbacks will leave the brand with 500 full-price stores and 300 outlet locations in the region.

“Some of the stores that we’re currently in don’t represent the best of our brand,” Jeff Kirwan, global president for Gap, said in an interview. “We want to make sure we don’t have so much of a disparity.”

Chief Executive Officer Art Peck, who was named to the job in October, has been working to reinvigorate the ailing Gap and Banana Republic brands. He previously shook up leadership at the chains, naming Kirwan to the Gap president job in November. Peck also eliminated the creative director position that had been held by Rebekka Bay, who joined in 2012 to refresh the brand.

Headquarters Jobs

The 250 eliminated jobs will mostly come from the company’s North American headquarters. The move will reduce overlap and streamline the organization, Kirwan said.

The company expects to lose about $300 million a year in sales from the store closings, in addition to one-time costs of $140 million to $160 million from lease buyouts, inventory and employee-related costs associated with the changes. Gap expects to save $25 million a year after the cuts are complete in 2016.

This is the second round of Gap store closures. The company said in 2011 it would shutter 21 percent of its North American stores. That decision was also led by Peck, who was then president for the brand’s North American operations.

Peck, who took the CEO title in February, said he’s “comfortable” with the number of stores Old Navy and Banana Republic are operating.

“The best way to think of these are bookends,” Peck said in an interview. “Obviously over the last four years the customer has continued to embrace digital and mobile. We’re always looking at our fleet and the right locations.”

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Cecile Daurat