Gap plans expansion in China

US-based Gap is looking to expand in China to offset sluggish sales back home. The brand operating Old Navy, Banana Republic and Athleta, plans to open 25 Gap stores and up to 10 Gap outlet stores in China this year, says Jeff Kirwan, president of Gap’s China division. Currently, the company has 80 stores in China.

“The opportunity in China is undeniable,” observes Kirwan, adding that Gap is seeing strong growth in its China-based retail outlets and online. “Gap is also rolling out its lower-end Old Navy brand to cater to China’s cost-conscious consumers, with plans to open five this year. We have already launched the first 22,000-sqft store in Shanghai,” he adds.

Gap has focused on international expansion to counter slowing growth at home. Its US sales declined about 7% in the fiscal fourth quarter to $1.05 billion, compared with $1.13 billion a year earlier. The US sales of Old Navy and Banana Republic were also down during this period. The company had net income of $307 million in the quarter ended February 1, compared with $351 million a year earlier. Net sales fell to $4.58 billion from $4.73 billion a year earlier. Gap is also expanding in Japan, adding 20 new stores this year to its current 38, Kirwan discloses.