The Gap is aiming to penetrate the Chinese market and up its Asian market share by opening its first store in China. The China store, due to open in 2010, will be the first new market that Gap has entered directly for more than a decade, rather than through the franchising model, launched in 2007, that it is using in the Middle East, Asia and eastern Europe.
“It’s a big opportunity … Chinese consumers love American brands,” Mr Murphy said at Gap’s annual investors’ meeting.
Mr Murphy contrasted the new approach to Gap’s initial international expansion in the 1990s, when it tried to apply a standard US store blueprint.
Gap’s online sales delivered revenues of more than $1bn in 2008, out of total company revenues of $14.5bn, and pre-tax profits of about $250m.
The clothing retailer said that it would continue efforts to increase the profitability of its store operations by reducing its total store base square footage by 10 per cent over the next five years, while maintaining store numbers.
Its more than 1,000 Old Navy stores in North America reported positive year-on-year comparable sales gains in August and September, its first two months of consecutive positive numbers for more than five years. Old Navy’s sales account for 40 per cent of Gap’s total sales. Comparable sales at Banana Republic and Gap brands have remained negative.
Gap also announced plans to return to television advertising in November for its namesake brand, after a two-year hiatus, and said it will continue to expand internationally.
Source: FT
Image: Gap logo