By  on December 19, 2006

SINGAPORE — The Gap is growing in Southeast Asia.

The San Francisco-based retailer opened its Singapore flagship here this month, a 9,000-square-foot store in the Wisma Atria mall on the city's shopping hub of Orchard Road. It completes a recent string of Gap launches in the region, including two other Singapore shops and one in Kuala Lumpur, Malaysia, as the company looks to ramp up its retail presence worldwide.

The stores were developed through a franchise agreement with Singapore-based retailer and distributor FJ Benjamin Holdings Ltd. Their partnership marks the first Gap franchises worldwide, in addition to the company-owned units in North America, Europe and Japan.

"Gap Inc. has always operated company-owned stores," said Ron Young, senior vice president and managing director of international strategic alliances. "But we really believed that, in order to reach the world markets in the density that we want, we had to develop a new channel."

Gap Inc. also signed a contract this year with Dubai-based franchise partner Al Tayer Group to launch Gap and Banana Republic in the Middle East in the first quarter of next year.

The expansions come as Gap Inc. continues to face struggling sales. The company last month reported a 10.8 percent decline in its third-quarter earnings. For the first nine months of the year, earnings were down 27.9 percent to $559 million.

Young declined to comment on how the expansion might contribute to the company's turnaround, but said that franchise deals were one part of the retailer's new growth initiatives.

"A few years ago, we had the belief that we had to own and control our stores," Young said. "Today, we recognize that there are operators out there that are extremely good retailers and merchants, and, with the right type of partnership, we can create very strong networks."

The main benefit of franchise partners is that they provide the local knowledge and experience to allow Gap Inc. to quickly reach new markets, Young said. He pointed out that the deal with FJ Benjamin was signed in January, only 10 months before the first Singapore Gap store opened in the city's VivoCity Mall in mid-October. The Kuala Lumpur store followed in mid-November, as well as the stores in Singapore's Centrepoint and Wisma Atria malls this month. Gap Inc. chief executive officer Paul Pressler traveled to Singapore this month to see the retail locations.

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