OLD NAVY SET TO EXPAND INTO CANADA
Byline: Melanie Kletter
NEW YORK — Old Navy is eyeing international expansion, beginning with Canada.
Gap, Old Navy’s parent company, said Tuesday it has agreed to purchase a 738,000-square-foot distribution site and building in Brampton, Ontario, near Toronto, to support Old Navy’s international expansion into the Toronto area.
The move is Old Navy’s first step into the international arena.
The 58-acre Canadian property is owned by Carlton Cards Ltd., which plans to vacate the facility early next year, Gap said in a statement. Gap plans to take possession next spring and spend the ensuing year remodeling the building and installing new systems and equipment. Terms of the deal were not disclosed.
The site is about 10 miles from an existing Gap distribution center that supports the Gap and Banana Republic units in Canada. A spokeswoman declined to offer specific plans for Old Navy stores in Canada, except to say Gap wants to get the distribution center in place before such stores are opened.
Maura Hunter Byrne, an analyst at Salomon Smith Barney said, “It makes sense for the chain, and there are lots of opportunities. Old Navy has grown very quickly, and its square footage now comprises almost 40 percent of the company’s total.”
Richard Jaffe of PaineWebber noted that Old Navy has “significant opportunities” both in the U.S. and elsewhere.
Old Navy launched its first unit in 1994 near Gap’s San Francisco headquarters. Company executives said then that the chain would become a key growth vehicle, and it has lived up to those expectations. There are now about 500 units in the U.S., including two giant flagships that opened this fall in San Francisco and New York.
In the latest quarter, Gap reported earnings grew 32.5 percent to $315 million, or 35 cents a share, due to strong profits and earnings gains at all divisions, particularly at Old Navy and Banana Republic. Old Navy’s same-store sales showed increases in the low teens, versus gains of 21 to 23 percent last year.
Old Navy saw a slight slowdown in same-store sales in November, but executives blamed the slip on tough comparisons with last November, when comps ran up in the mid-20s.
Gap has operated overseas since 1997, when it opened a Gap chain in London. Now, there are 369 Gap stores in the U.K., France, Germany, Japan and Canada, as well as 10 Banana Republic units in Canada.