MILAN — Gap Inc. has been retrenching in Europe, but OVS is giving the American retailer a new lease on life in Italy.
On Wednesday, OVS said it will acquire all Gap stores in Italy, effective after the completion of the consultations with the unions beginning in the next few weeks. The transfer of all 11 Gap stores in Italy to OVS is expected to take place in February.
This is a further evolution of a franchise agreement first inked in 2020, through which OVS has been offering GapKids in its stores and Gap adult and kids through its e-commerce site.
“Every Italian that has ever visited the USA knows and loves this iconic brand,” said OVS chief executive officer Stefano Beraldo. “In the development of our overall business model, we believe that this agreement will be another element of value creation for our company and that it represents a further step in the evolution of the OVS platform strategy to partner with other brands consistent with our positioning and values. We will leverage our unparalleled experience as a retailer and our creativity to strengthen Gap brand development in our country through both physical and digital channels.“
On Oct. 20, 2020, Gap Inc. announced a strategic review of its company-operated Gap business in Europe, evaluating the closure of stores on the continent. The new agreement with OVS will allow Gap to leverage the Italian retailer’s expertise and “to operate its business through a more capital efficient partner model,” stated the companies. However, Gap’s store in Milan is expected to close in November 2022 when the lease comes to an end.
“Gap has served customers in Italy since 2010 and we are looking forward to expanding our partnership with OVS, a valued partner who has demonstrated their ability to deliver outstanding omnichannel Gap brand experiences to customers in Italy,” said Mark Breitbard, president and CEO of Gap Global. “The decision to transfer our Gap business is an example of how we are partnering to amplify and grow our brand in international markets.”
OVS has been attracting new customers by becoming more of a platform, which in addition to offering a range of products designed and created in-house is opening up to collaborations with other brands, including, in addition to Gap, Baby Angel, first launched with the late Elio Fiorucci, and Grand & Hills, with Davide De Giglio, who would go on to create New Guards Group. Beraldo also introduced the Nina Kendosa brand to the stores, as well as Piombo for men and from this fall for women, designed by Massimo Piombo, who is also creative director of OVS.
Beraldo believes in a “multichannel platform offering contemporary, accessible, easy-to-wear fashion, sustainable and far from the fast-fashion concept, with lasting, timeless designs.” This is also in sync with the increased investments in sustainability. He was proud to note that OVS has jumped to the top spot in the Fashion Transparency Index.
OVS has been growing its business and market share and, as reported, last month it issued a six-year sustainability-linked senior unrated bond for between 150 million euros and a maximum of 200 million euros.
The new financial resources will be channeled into technological innovations to save energy, set up photovoltaic panels, digitalization and the management of energy in the group’s store network. OVS has been investing in the relaunch of Stefanel, the storied Italian brand it acquired earlier this year.
Last month, Beraldo trumpeted “a very positive third quarter,” and said OVS has reached a 9 percent market share, up by 100 basis points in the year, thanks to a strong performance of the stores — without opening new ones — and e-commerce.
Sales in the first half of the year were up 59.5 percent to 599.2 million euros, compared with the same period in 2020.
Online sales rose 30 percent compared with 2020 and 77 percent compared with 2019. OVS customers total 4.7 million, up 12 percent in a year.
In the second quarter, OVS generated a cash flow of 75.7 million euros.
Earnings before interest, taxes, depreciation and amortization in the second quarter amounted to 54.5 million euros, up 50.9 percent compared with the same period last year and up 45.7 percent compared with 2019 — the highest EBITDA ever for the company, thanks to the positive sales performance, its cost control and the careful management of the markdowns.
OVS, which went public in 2015 on the Milan Stock Exchange, also includes the UPIM chain and operates around 1,400 stores in Italy and 400 outside the country. Shares closed up 1.47 percent at 2.61 euros at the end of trading on Wednesday.