LONDON — Europe’s first Banana Republic store will open next year on London’s Regent Street, although the exact location has yet to be confirmed.

The firm said in a statement Monday it had signed a lease on a London store, but declined to give any further details. A company spokeswoman said the store would be opened directly by Gap Inc., and not via a franchise agreement.

Stephen Sunnucks, president of Gap Inc. Europe, said there is a lot of potential for the brand in Britain.

“With its affinity for fashion and luxury products, the United Kingdom has the potential to be a strong market for Banana Republic, and our customers in Europe have expressed a great deal of interest in us bringing the brand here. This is an exciting first step for Banana Republic in the U.K.,” he said in a statement Monday.

He added Gap Inc. was interested in expanding into international markets generally.

“International is an important potential area of growth for Gap Inc. — and as we’ve said, we are continuing to explore ways to take our existing brands into new countries,” he said, adding the London store was a “logical extension” of the Banana Republic brand into new markets.

The spokeswoman added the plan was to expand the Banana Republic brand across Europe.

As recently as last month, the company had dampened speculation in the British press that it was planning to open here, saying only that it saw “opportunity” for Banana Republic in the U.K. in the long term.

Most recently, Gap Inc. said it would open Gap and Banana Republic stores in South Korea through franchise agreements with Shin­segae International.

Shinsegae plans to open at least 40 Gap and Banana Republic stores over the next three years, with the first units from each brand opening this year. Gap Inc. has other franchise agreements for Gap and Banana Republic in the Middle East, Indonesia, Singapore and Malaysia.

This story first appeared in the January 30, 2007 issue of WWD. Subscribe Today.

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