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.”

Gap is still struggling to fix its merchandise just as apparel sales have flattened and shoppers are shifting their dollars to the Internet and fast-fashion competitors like Uniqlo, Zara and H&M. Gap is primarily dependent on malls, a format under tremendous pressure from e-commerce. With store sales drying up, Gap is finding it increasingly difficult to generate the cash it needs to keep investors happy and pay the bills.

“Gap’s time has passed,” said Chicago retail consultant Brian Kelly. “They are not even taking care of their stores. When a brand gets to that point, it’s game, set and match.”

Gap’s problems are numerous, so it helps to break down the challenges into three broad categories: sales, distribution and economics.

Sales struggles

Even in tough times, most retailers can point to some part of the business showing some growth.

Not so with Gap.

All three major business units — Gap, Old Navy and Banana Republic — are struggling. In 2015, sales at stores open for at least a year fell 4 percent. Things are not that much better this year: first quarter same-store sales dropped 5 percent. In fact, Gap has not recorded a monthly same-store sales increase since March 2015, a good 14 months ago.

CEO Art Peck has made fixing Gap’s merchandise his top priority.

“I spoke to you very directly about the fact that we were not where we needed to be in terms of products, across our brands,” Peck recently said in a conference call with analysts. “We have done a great deal of work across the company over the last 12 months-plus to be focused on product, focused on restoring the aesthetic of our brands, quality where it is appropriate, consistent fit and a number of elements of product.”

For example, Gap has high hopes for the Athleta activewear brand.

“Athleta continues to perform superbly for us,” Peck said. “It is positioned right in the sweet spot of the active space, which is growing faster than the overall rate of apparel. ... (The brand is not only) a growth driver in this company, but also as a source of innovation to the rest of our portfolio.”

But is that enough?

Gap has failed to establish a consistent brand identity since former CEO Mickey Drexler pioneered the basics in the 1990s.

“While the assortment may improve at Gap brand by spring 2016 under new management, regaining traffic is a tough task, especially after disappointing customers” with lackluster clothing displays, Matthew Boss, an analyst with J.P. Morgan, wrote in a recent report.

Apparel brands also no longer command the consumer loyalty they once enjoyed. Carol Spieckerman, president of the Spieckerman Retail consulting group, said the days of big chains telling consumers what to wear are over.

‘A lot more vulnerable’

“We’re operating in a trendless environment,” she said, noting that other apparel retailers, including J. Crew, Macy’s and Abercrombie & Fitch, are struggling. “But Gap is in a lot more vulnerable position than other retailers, because they held on this dictatorial bent (about what’s fashionable) a little bit longer than necessary. The game has shifted to react to consumers rather than dictate the fashion.”

Speed, not brand loyalty, is what drives shoppers these days.

Gap is ceding ground to fast-fashion retailers like Uniqlo and H&M, because those companies have been able to more quickly bring new products into stores and pull the merchandise when a trend fades. Gap is still stuck with its old model of planning collections a year in advance, and tastes can dramatically shift in those 12 months, Spieckerman said.

The competitive landscape is only going to get tougher. Amazon is planning a major push into its own clothing brands. And Target, whose apparel prices compete directly with Old Navy, recently hired Mark Tritton as its chief merchandise officer. Tritton previously served as president of Nordstrom Product Group, where he oversaw development of the high-end retailer’s private label brands.

It’s no secret that the Internet has sapped traffic from physical stores, especially malls. In fact, analysis firm Morningstar estimates that e-commerce bears some responsibility for eliminating 900 million square feet of physical retail real estate to date, or 12 percent of shopping centers’ current footprint.

Gap’s biggest Achilles’ heel is its reliance on malls. About 75 percent of Gap stores and 80 percent of Banana Republic locations are in malls.

Most retailers have tried to mitigate declining store traffic by boosting e-commerce operations — whether through desktop computers, mobile devices or social media. Gap’s digital efforts, however, have been going in the wrong direction.

As e-commerce chief, Peck helped Gap generate annual online sales gains of 21.5 percent in 2013 and 10.6 percent in 2014. Last year, online sales were essentially flat.

A missed chance?

Weak e-commerce efforts also hurt store sales, because people tend to research merchandise online before going to a physical location to buy the item.

Gap may have already missed its chance to persuade consumers to think of the retailer as a destination for online shopping, Kelly said.

“Gap lacks the punch to be a viable Internet brand,” he said.

Almost eight years removed from the Great Recession, the U.S. consumer has yet to fully recover from the devastating economic downturn. Despite low gas prices, which theoretically give consumers more spending money, retailers have seen only lackluster sales growth, in the low single digits.

Some economists think consumers will never return to the debt-fueled spending sprees of yesteryear. As a result, retailers are fighting for a piece of a shrinking pie, made even smaller by the rapid growth of e-commerce giant Amazon.

In 2011, several people predicted that consumer electronics retailer Best Buy would file for bankruptcy, noting that its top rival, Circuit City, had already done so, blaming competition from Amazon.

But Best Buy has survived and stabilized sales, in part because of its ability to expand into more categories — services, high-end televisions, appliances, mobile devices — even drones.

Spieckerman says the rapidly changing nature of technology allows retailers like Best Buy to constantly update its inventory. However, with retailers like Gap, “apparel is apparel,” she said.

Gap enjoys strong credit ratings and relatively little debt compared with other retailers, so the company will not need to file for bankruptcy anytime soon.

However, Gap’s inability to increase sales is putting enormous pressure on its finances. In 2015, its free cash flow totaled $868 million, a severe 38 percent decline from the $1.4 billion it generated the previous year, according to documents filed with the Securities and Exchange Commission.

To offset declining sales, Gap has been closing stores. Last year, the company said it will shutter 25 percent, or 175, of its stores in North America over the next few years. And last week, Gap said it plans to close another 75 stores in other countries.

Unless it can reverse its fortunes, Gap will be stuck in a death cycle of closing stores to cut costs because it can’t increase sales. Closing stores also means less revenue, adding further pressure on the retailer in the long term.

And that leads to one place: Chapter 11 bankruptcy.

Thomas Lee is a San Francisco Chronicle columnist. He is author of “Rebuilding Empires” (St. Martin’s Press), a book about the future of big-box retail in the digital age. Email: tlee@sfchronicle.com Twitter: ByTomLee