Gap Spreads Wings into Latin America - Analyst Blog

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Encouraged by the response of its first Latin American store and in tune with its strategy of expanding international footprint, Gap Inc. ( GPS ) stepped into Panama by opening two stores -- one Gap and one Banana Republic. The stores have been launched under the franchisee model in agreement with Superior Retail Inc.

Located in the Albrook Mall in Panama City, the stores will offer the U.S collection of Gap, GapKids and babyGap and Banana Republic's affordable luxury attire and accessories for both the genders. As per management, the stores will have product assortments customized in accordance with the taste of Panama customers and the regions climate.

Gap had launched its first Latin American store in Chile, South America last year. The opening of the new stores in Panama marks the beginning of numerous stores that the company plans to open in Latin America over the next two years.

Apart from Chile and Panama, the company plans to extend the boundaries of its brands to three new Latin American countries, namely Colombia, Uruguay, and Peru. Backed by its success in Chile, the company remains confident of achieving a positive response in the newly planned locations as well as other counties in the region.

Gap presently has agreements in place with Superior Retail Inc. to open three more franchisee stores -- two Gap and one Banana Republic, in Panama through 2012. In 2012, the company is also lined to open two additional Gap stores and its first Banana Republic store in Chile, extending its existing agreement with Komax.

Later in 2012, the company has plans to inaugurate its first stores in Colombia in Bogota and Medellin, again under the supervision of Superior. The company also has plans to set foot in Uruguay in 2012, opening a new Gap store in agreement with a subsidiary of Neutral.

Additionally, Gap announced plans to enter Peru in 2013 with a Gap store to be launched in agreement with a subsidiary of Komax.

Gap is one of the leading players in the highly fragmented specialty retail sector 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. The company's globally recognized brands complement one another, enabling it to leverage its position in the sector.

The primary competitors of the company include American Eagle Outfitters Inc. ( AEO ) and The TJX Companies Inc. ( TJX ).

Currently, Gap's shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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