SAN FRANCISCO — Shoring up sliding North American sales, driving e-commerce and expanding in international markets are key goals for Gap Inc. in the next year, executives said Tuesday at the company’s annual meeting.
The company needs “to make North America a stronger business model,” said Glenn Murphy, chairman and chief executive officer.
“We have to get serious about connecting with customers and gaining back market share,” Murphy said, addressing Gap’s troubled U.S. and Canadian sales and underscoring the need to lure North American customers back into its stores.
Gap will push its online and international business, now 19 percent of the business, and will introduce e-commerce platforms for Canada and the U.K. by 2010, followed by Japan in 2011.
The largest U.S. apparel specialty retail chain also will open stores in six new countries this year — Bulgaria, Croatia, Cyprus, Romania, Egypt and Jordan. Murphy said he anticipates additional opportunities overseas because the company’s international business is strong.
“We are looking at China…we believe it’s a timely market, a good opportunity for us,” Murphy said.
Gap’s North American business, which accounted for about 81 percent of total revenues in 2008, has been struggling for years, and the company hasn’t reported a quarterly sales increase since its overall revenues crept up 0.1 percent to $3.85 billion in the third quarter of fiscal 2007.
Sales at the chain have continued to tumble this year. First-quarter sales dropped 7 percent to $3.13 billion and were down 8 percent on a comparable-store basis as comps fell 12 percent at Gap North America, 13 percent at Banana Republic North America, 3 percent at Old Navy North America and 4 percent at international. Comparable-store sales in April slid 4 percent, as net sales fell 5 percent to $1.05 billion. Comps were down 8 percent in March as net sales declined 6 percent to $1.29 billion.
“We have to get those customers back,” Murphy said. “I don’t care if you’re a value player or a luxury player, your message has to be a call to customers.”
Among ways to reinvigorate sales, Gap is launching new store concepts, including those currently open for Old Navy, others coming this fall for Banana Republic and an outlet store concept that will debut in the near future.
“Our real estate is a little stale; it has not been reinvested in a way that I’m comfortable with or the [company directors] are comfortable with,” Murphy said.
Another big part of Gap’s effort to reinvigorate North American business is Athleta, a Petaluma, Calif.-based online and catalogue retailer specializing in sports and activewear acquired by Gap in September for $150 million — the company’s first acquisition in 25 years. Athleta was added to Gap’s online store offerings last month.
Gap is expected to report quarterly earnings after the markets close on Thursday.
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