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Gap guns for rapid international and online expansion

Gap is gunning to increase its market share so that international and online sales account for more than a quarter of its total net sales by its 2013 financial year.

At an investor meeting in the US yesterday, the US lifestyle multiple said it would sell to more than 80 countries by the end of this year, up from 25 at the start of the year. By the end of this year it will open stores and offer online shopping in China and Italy, which it said are two of the top ten apparel markets in the world.

Gap chairman and chief executive Glenn Murphy said: “While never losing sight of our goal to gain market share in our North American businesses, our strong portfolio of brands combined with several powerful platforms such as outlet, online and franchise give us significant global runway.

“We’re making the investments necessary to shift the balance of revenue over time to come increasingly from our online and international businesses.”

Gap Europe and international strategic alliances president Stephen Sunnucks said that in the last five years the company has doubled its store base of European company-owned stores and franchise stores from 165 to 335, and expanded from two to 24 countries.

He said the business had made mistakes in the past but had taken a three-phased approach to rectifying these by stabilising the business, turning it around, and going for growth. “We are now in the third phase” he said.

Sunnocks explained previous problems had included customers said their products had become “less relevant in fashionability”, but they still liked the quality and the in-store environment and windows had become “predictable”.

He said: “We set about fixing these problems with local teams and local expertise.” Product is now picked from the main collection by local buyers.

Another problem was that Gap was entering secondary locations with stores that were too big to sustain, so he said: “We closed underperforming stores” and added: “To be successful you need brand building affluent stores in big cosmopolitan cities. Once you have brand awareness you can build out across the country, then online.”

Further Banana Republic stores will open in the UK, he said.

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