Gap Inc., though still struggling in the U.S., keeps advancing its overseas expansion.
In September, the $14.5 billion retailer will open its first store in South America, in the Parque Arauco mall in Santiago, Chile. A franchise agreement has been signed with Komax, which has the exclusive rights to operate Gap brand stores in Chile. Komax purchases the merchandise from Gap and must adhere to Gap standards. Komax has franchise agreements with other well-known retailers, including The North Face, Brooks Brothers and Ralph Lauren.
Gap did not state how many stores it expects to see in South America.
Gap said, with Chile, it will have stores in 25 countries on six continents. “We are looking forward to offering Gap’s modern, cool American designs to customers in a retail sector that is strong, and has an exceptional demand for fashion,” said Stephen Sunnucks, president, Gap Inc., Europe and strategic alliances. “Komax has impressed us with their local expertise in the market and proven track record of launching international brands to customers in Chile.”
Gap has 165 franchise stores in Eastern Europe, Latin America, the Middle East and Australia. By 2015, the company expects to have 400 franchise stores.
The retailer also operates some wholly owned stores abroad, including a handful in China, which opened this month. It views online growth and multichannel expansion overseas as helping to counterbalance the negative comparable-store sales in America. Gap Inc. chairman and chief executive officer Glenn Murphy recently said that there’s “a big shift in the balance of the business,” whereby international and online operations are seen generating 27 percent of revenues by 2013, versus 16 percent in 2007.