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Gap outlines growth plans for China

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Associated Press
Published:
NEW YORK — Gap Inc. announced Wednesday it plans to more than triple sales in China in three years as it seeks to grab a bigger piece of the overall $1.4 trillion global clothing market.
The San Francisco-based clothing chain, which operates stores under the Gap, Old Navy, Banana Republic and Athleta brands, generated $300 million in sales in China in the latest fiscal year ended Feb. 1. It says China will be its biggest growth initiative.
The company had 81 Gap stores in China at the end of last year and unveiled its first Old Navy store in the country earlier this year. It plans to open about 30 additional Gap stores in China in the current fiscal year.
“Gap has the ability to grow aggressively in China,” Jeff Kirwan, president of Gap’s Greater China division, told investors at the company’s investor meeting Wednesday.
Gap is also trying to meld its online business with its physical stores as it sees shoppers’ purchases influenced by the Web and mobile devices.
As part of that strategy, the chain told investors it’s expanding a program that it began testing last June that allows customers to reserve merchandise online and then pick it up at the store within 24 hours. By the end of the second quarter, it will have that service in all of Gap branded stores. Overall, the service will be in more than 1,000 Gap and Banana Republic stores.
Art Peck, president of Gap’s growth, innovation and digital division, told investors that just under 500,000 reservations have been made since the service was launched. He noted that the program allows Gap to “monetize footsteps in the store” and to show outfitting suggestions and drive higher transactions.
Gap also said that it will start to test a new feature that allows shoppers to order products online in the stores.
Gap Inc., which has been among the bright spots among its peers, said last week that a key sales measure fell more in March than the market had expected, partly because of bad winter weather. Gap’s revenue for stores open at least a year fell 6 percent. This is considered a key indicator of a retailer’s financial performance as it strips away the impact of recently opened and closed sites. Analysts polled by Thomson Reuters anticipated a drop of 4.7 percent.
Gap had already warned investors that a shift of the Easter holiday into April this year, from March last year, would hinder its sales for the month. At the time, the company reaffirmed its full-year forecast. But the company also warned that first-quarter gross margins will be lower than last year, due in part to the rough winter in much of the country and high inventory levels.
Gap’s shares rose nearly 2 percent, or 63 cents, to close at $39 Wednesday.
Story tags » ClothingAsia

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