Blog: Leonie BarrieGap aligns for global growth

Leonie Barrie | 26 April 2011

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.

The retailer's focus on its international stores is the latest in a number of attempts to shake up its business amid a disappointing performance from its domestic namesake chain. It also says recent moves into China and Italy have proved the success of its formats internationally.

British supermarket giant Tesco is also vowing to boost its clothing business after posting flat full-year general merchandise sales in its domestic market. The country's largest retailer recorded a 7.8% increase in group trading profit to GBP3.7bn (US$6.01bn) for the year, with revenues up 8.1%. But in the UK, sales of general merchandise, clothing and electricals edged up just 0.4% to GBP5.3bn. "Improving the performance of these categories in the UK is a priority," the retailer said, adding its teams are now working to boost its ranges, merchandising, pricing and promotions.

Meanwhile, the global union representing workers in the garment industry has released what it describes as a "damning" report on working conditions at Asian suppliers making sportswear for Adidas, Dunlop, Gap, Greg Norman, Nike, Speedo, Ralph Lauren and Tommy Hilfiger. The report from the International Textile, Garment and Leather Workers' Federation (ITGLWF) focuses on conditions in 83 factories in Sri Lanka, the Philippines and Indonesia which together employ over 100,000 workers supplying multinational sports and garment brands.

Ethiopia is trying to position itself as a sourcing destination for the textile and apparel industry, and is forging ahead with plans to grow its annual export earnings to $1bn over the next five years - an ambitious goal given that this is almost 40 times the revenue of $25m earned by the country in 2009/2010. Foreign Direct Investment is central to its aims, and already some global textile giants are making inroads in the country.

As the second largest economy in the world, it is perhaps inevitable that China's currency is set to play a bigger role in international trade. Indeed, official figures released this month already suggest trade deals settled in yuan reached US$58.7bn last year and could rise to more than $3 trillion a year by 2015. And the advice to apparel firms - who, after all, depend on China as one of the most important production and sourcing centres in the world - is to position themselves for new opportunities as the yuan transitions to an international currency.















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