Gaps successful move into China supports its international game plan

Gap's successful move into China supports its international game plan

Specialty clothing retailer Gap Inc is to consolidate its international operations into one unit based in London as part of a major push to grow its business globally - including opening its first overseas Old Navy store next year.

The company, which operates the Gap, Banana Republic and Old Navy chains, says the new division will bring together its own and franchise stores across Europe, the Middle East, North Africa, Asia Pacific and South America.

It will be led by Stephen Sunnucks, previously president of Gap Europe, who joined the firm five years ago and will now be responsible for about 530 stores across 30 countries, including eight of the world's top 10 apparel retail markets.

"Our successful openings in China and Italy have given us further evidence that we have a strong game plan for entering and expanding into International markets through a unique combination of online, specialty retail, outlet and franchise stores," says Glenn Murphy, chairman and CEO of Gap Inc.

"Bringing our four international business units under the leadership of a proven global retail executive like Stephen Sunnucks allows us to leverage resources, operate consistently, and grow the business at an accelerated rate."

Sunnucks adds: "As we've expanded into new countries and introduced additional brands from our portfolio, our distinctively American aesthetic has resonated very well, everywhere from Milan to Shanghai to Sydney.

"We have the flexibility to adapt our formats for each market so that we can gain a larger share of the $1.4 trillion global apparel retail market."

Gap also said John Ermatinger, currently president of its Asia Pacific Region, will take on a new role establishing Old Navy International. Beginning the new role in June, his first goal will be to open Old Navy in Japan by the end of 2012.

Gap began shipping products to over 90 countries in 2010, and Old Navy is its top performing brand in more than half of those 90 countries.

"We now have the International infrastructure in place to launch Old Navy in a cost effective manner in new markets through our range of channels," Murphy adds.

Gap has said it expects to build its international and online sales to account for at least 30% of revenues by 2013, and has spent the past year focusing on international growth.

Its products are now sold in 32 countries and available online to customers in over 90 countries worldwide - up from just eight countries and online only in the US back in 2006.

Towards the end of 2010, the first Gap and Banana Republic flagship stores opened in Italy, along with the first Gap stores and an online retail site in China, both of which are already among the company's top 10% performing stores in the world.

In the year ahead, the company plans to open around 190 stores worldwide, including ten each in China and Italy. It also plans to double the number of franchise stores to 400 by 2015.

The retailer's focus on its international business comes amid a disappointing performance from its domestic namesake division.

While the San Francisco based firm recently delivered a 9.3% rise in full-year earnings to $1.2bn, and a 3.3% rise in revenues to $14.7bn, Gap's North American division was the only unit to report negative same-store sales for the full year, down 1%.

In an attempt to shake up its business, the retailer in February introduced a raft of changes to its North American management team, replacing president Marka Hansen with Art Peck, former head of the outlet division, as the unit's boss.

It has also set up a Global Creative Center in New York, headed by Pam Wallack, the current president of Gap Adult North America, with input from divisional presidents based in London, Tokyo, Shanghai, and San Francisco. It main aim is to improve performance and execute one global design vision for Gap brand around the world.