By and  on May 19, 2010

Gap Inc.’s business is back on track and positioned to take specialty apparel market share in North America from competitors, chairman and chief executive officer Glenn Murphy told attendees at the firm’s annual meeting at its San Francisco headquarters Tuesday.

“We’ve spent a lot of time at each of our brands,” said Murphy, at Gap’s helm since 2007.

Coming out of the recession, Gap has no debt, $2.3 billion in cash, a clearer grasp of what apparel customers want in the lean economy, remodeled and relocated U.S. and Canadian stores, and online sales in Canada poised to launch, Murphy said.

North America accounted for 80 percent of the Gap’s total $14.2 billion in sales last year, and the U.S. for 74 percent of the corporate total. In the first quarter of this year, sales in North America increased 2 percent from a year earlier, in contrast to a 12 percent drop in the comparable 2009 period.

With fewer specialty stores industrywide being opened in North America, “now, in this decade, it will come down to who has the right brands, the right execution and the right people,” Murphy told the gathering of about 200 shareholders and employees.

Internationally, besides bowing this year in Italy and China, online sales will start in the U.K., from which the company will serve nine European countries with one-price shipping. Of its current 178 European stores, 135 are in the U.K. and 40 in France. In 2011, a Paris store will be added, Murphy said. The company also has 120 stores in Japan.

With 3,100 stores and 135,000 employees, this year Gap expects to open 65 company-owned stores worldwide, weighted towards international locations and outlets, and close about 110 units, weighted toward the Gap brand, a spokeswoman said. The company doesn’t give breakdowns of future locations and closures.

Also on Tuesday, attendees at Nordstrom Inc.’s annual meeting in Seattle were told how multichannel integration had evolved into a service advantage at the chain, where, according to Blake Nordstrom, president, “customer service is our number-one goal.”

As executives noticed missing online sales due to out-of-stocks, capabilities were built into Nordstrom’s management information system allowing for shared inventory among full-line stores, catalogues and nordstrom.com. Items are routed from within the system to fulfill the order at store level.

“We want customers to get what they want in the size and color that they want,” Nordstrom said.

Supporting the inroads Nordstrom has made with its online efforts, the Cedar Rapids, Iowa, fulfillment center has been expanded by 300,000 square feet.

“This thing doesn’t work unless we have customer service,” Nordstrom stated. “As customer service improves, stock performance improves.”

He noted that over the last 10 years the stock had grown more than 200 percent, from $12.50 to $39.25. Shares on Tuesday closed down $1.19, or 3 percent, at $38.06.

“As consumers sit on the sidelines, we have to give them a reason to part with their dollars,” said Nordstrom. “This forced us to evolve our product offering. We continue to see improvement with bringing in fresh new product every day.”

With 114 full-line stores in 28 stores, the firm plans to remodel about six units a year and has earmarked $100 million a year for this effort.

Reflecting on recent improvements in the business — such as the 43.2 percent increase in first-quarter profit reported last week and the 10 percent improvement in 2009 earnings — Nordstrom said, “It’s a lot better to be here today than it was a year ago.”

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