Gap Inc.
(
GPS
) recently announced the opening of its first flagship store in
Hong Kong and has further plans of opening stores in the Chinese
territory. These new store additions reflect the company's
intention to further expand its global presence by increasing its
store counts in China through company-operated stores, franchise
and online channels.
Gap opened a 15,000 square feet store in Hong Kong's Central
District. The store is spread over four floors and has a Chinese
architectural touch for creating an inviting and inspiring
environment for customers, who have the luxury to shop from a wide
array of collections from Gap, GapKids, babyGap, and GapBody. In
addition, Gap has also announced to open new stores in Shanghai,
HangZhou and Tianjin in coming few weeks.
In a drive to boost international operations, Gap consolidated
its foreign business under one umbrella, while operating from
London. Lackluster sales in North America compelled the company to
explore business in other shores. In order to counter the domestic
market saturation, Gap is aiming to generate 30% of total sales
from its overseas operations and online business by 2013.
To achieve this end, Gap is making huge investments in the
world's largest populated country, or China. China has a tremendous
growth opportunity as the company believes that the consumers in
China have greater appetite to spend. Moreover, it is anticipated
that the retail sales in China will increase over two-folds by 2015
from 15.4 trillion yuan last year. The company has revealed that by
the end of fiscal 2012 it is going to increase its number of stores
five-folds in China to 45 stores, up from the current count of 9
stores.
Gap is a premier international specialty retailer offering a
diverse range of clothing, accessories, and personal care products
for men, women, children and babies. Its flagship brands include
Gap, Banana Republic, Old Navy, Piperlime and Athleta.
Gap intends to increase its market share in the $1.4 trillion
global apparel market and hence is focusing on enhancing its
franchise store base counts. Over the last five years, the company
has increased its franchise store count to about 200 that spread
across 26 countries. Moreover, with this announcement, the
company's presence has expanded in 32 countries. Further, Gap wants
to increase its franchise store base counts to about 400 by
2014.
Gap competes with national and local department stores and
discount stores, such as
American Eagle Outfitters Inc.
(
AEO
) and
The TJX Companies Inc.
(
TJX
). Currently, the company maintains a Zacks #3 Rank, which
translates into a short-term 'Hold' rating. Our long-term
recommendation on the stock remains 'Neutral'.
AMER EAGLE OUTF (
AEO
): Free Stock Analysis Report
GAP INC (
GPS
): Free Stock Analysis Report
TJX COS INC NEW (
TJX
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