SAN FRANCISCO — North America will be the key region for Gap Inc. this year.
“We were not happy with 2011,” Gap chairman and chief executive officer Glenn Murphy told shareholders at the retailer’s annual meeting here Tuesday. Last year, North American same-store sales dipped 3 percent at Gap and 6 percent at Old Navy, while remaining flat at Banana Republic. The company’s net income fell 17 percent to $833 million, and net sales slid 1 percent to $14.5 billion.
Murphy pledged there would be improvement in 2012. He said Gap is dedicated “first and foremost to grow in our domestic North American business, which is critical to the company’s strategy.” He added the management team is “motivated, committed and determined to make sure we stand in front of our shareholders next year and talk about the great success the company’s had.”
Sabrina Simmons, Gap’s executive vice president and chief financial officer, elaborated, “After five years of extremely disciplined expense management coupled with a focus on international investments, we plan to invest more in our domestic businesses in 2012. With greater confidence in our product, we plan to invest in areas like marketing and store payroll. However, we are committed to being prudent about the level of investment depending upon our momentum and our likely return.” RELATED STORY: Gap China Remaining Optimistic Despite Naysayers >>
In addition to enhanced marketing plans, where Murphy said the concentration would be on the “Gap brand globally and Banana Republic,” he stressed Gap has worked since fall 2011 to elevate product in key categories “where we know we can win, where we can really dominate and beat the competition.” In the first quarter of this year, he noted, “We are seeing some progress. It’s early days.”
Gap’s emerging retail concepts will also propel growth, according to Murphy. He highlighted the group’s decision to open its first Piperlime store in September at 121 Wooster Street in New York’s SoHo neighborhood, and the expansion of Athleta. Gap opened 10 Athleta stores in 2011 and expects to open 25 in 2012. It is on pace to have 50 stores by 2013. “We are really excited about not only what Athleta has done, but what Athleta can do for Gap Inc.,” said Murphy.
The health of Gap’s North American business is crucial to its standing abroad. Murphy underscored Gap’s mission is to share “American style around the world.” “As we go out around the world and compete against the likes of H&M and Inditex and Uniqlo, the American style component, how that gets interpreted inside of each one of our brands in a distinctive way, is critical to this organization, and this company succeeding on a global stage,” he said.
When it comes to spreading its global reach, Murphy said Gap’s goal is for international and online revenues to account for 30 percent of the business in 2013, up from 26 percent in 2011. Gap’s franchised operations will be an important part of achieving that goal. Murphy said Gap’s franchised business jumped 47 percent last year, when franchises opened in eight new countries. Overall, he detailed, Gap entered its 40th country in the first quarter of this year — Panama — and can operate in 90 countries around the world. Of the 40 countries where it is present, Gap operates in 34 of them via franchises.
One of the key focuses will be China, where Gap anticipates opening 30 stores this year.
Summarizing Gap’s efforts for the year, Simmons said, “It’s our objective to drive modest top-line growth through the stabilization of our base businesses and a continuation of our global growth initiatives which are focused on our online, outlet and franchise channels.” So far this year, she emphasized, “We are pleased that our first-quarter 2012 performance represents meaningful progress against our priorities, including delivering 6 percent total revenue growth.”
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)