NEW YORK (
shares were dropping in New York as the retailer said it plans to open new stores for its flagship brand as well as for Banana Republic and Old Navy in Asia and Brazil to grow sales.
The $17-billion market cap company, which also owns Piperlime, Athleta and newly-acquired Intermix, is looking to expand internationally with its lower-price point brand, Old Navy. Gap plans to begin franchising Old Navy stores in 2014 in "key" international markets, the said San Francsico-based company in a statement Wednesday.
"We're entering a period of global growth," said Chairman and CEO Glenn Murphy in the statement. "We see it particularly in some countries ...
where double-digit growth is to keep up with the market."
Gap shares were falling 1.7% to $37.15.
Gap is also considering adding company-operated Old Navy and Banana Republic stores in China, based on the success it has had so far with its flagship brand there, Murphy said at an investor gathering Wednesday. The company is also looking to grow in San Paulo and New Delhi with Gap stores, the CEO added.
Noting that consumers in international markets are eager to buy cultural and fashion cues from American style, the company plans to "make sure we can dominate on this front and be the world's favorite on American style," Murphy said.
The global retail apparel market is a $1.4 trillion business, of which $300 billion comes from the U.S. market. Internationally, Gap's market share rose to 0.5% in 2012 from 0.25%.
"For us to win, we've got to win on two dimensions ... You need integrated customer experience -- one brand, one experience online or offline, whatever we can do to satisfy customers," Murphy said.
Gap had about 3.9% of the U.S. market share last year, up 20 basis points from the year before. Murphy said the company has the potential to reach 4.5% of the U.S. market.
Murphy spoke of the opportunities in North America for its acquired brands - Athleta, Piperlime and Intermix.
"Athleta was a catalog business," Murphy says. "Of course we liked because it
was a brand
in a different category and
had a great team and marketing, however it had a wall that it hit."
"It needed a lot of support," but the company has the potential to rise to the same scale as Banana Republic and Old Navy, he said.
The Gap has also acquired two additional businesses - Piperlime and Intermix. Piperlime, he said, needed stores while Intermix needed an e-commerce platform to frow sales.
Last week, the apparel company said March 2013 net sales rose 7% compared to the year-earlier period. Net sales for the five-week period ended April 6, 2013 were $1.56 billion compared to $1.46 billion for the five-week period ended March 31, 2012.
Global comparable sales by brand for last month were as follows:
Gap: flat versus 7% growth last year
Banana Republic: 1% growth versus 5% growth last year
Old Navy: 2% contraction versus 11% growth last year
In other retail related news,
dropped its first-quarter guidance due to seasonal weakness and weather-related instability - a theme cited by other retailers reporting
The Minneapolis-based discount retailer said Tuesday that it expects comparable-store sales growth in the first quarter to be flat "due to softer-than-expected sales trends particularly in seasonal and weather-sensitive categories across the store."
Target expects first-quarter adjusted earnings per share to be "slightly below" the low end of its prior guidance of $1.10-$1.20 per share. First quarter GAAP EPS is expected to be 28 cents lower than adjusted EPS from losses related to the early retirement of debt, share dilution related to the Canadian segment countered by net gains associated with the sale of its credit card receivables portfolio to
, the company said.
Analysts had expected the company would post quarterly earnings of 96 cents per share, according to the
Target reports first-quarter earnings on May 22.
Target shares were rising 0.5% most recently to $68.74. Shares of Gap were most recently falling 1.6% to $37.16.
-- Written by Laurie Kulikowski in New York.
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