San Francisco, California based premier international specialty retailer, Gap Inc. (GPS), in its streak to further expand its global footprint, has recently opened its first ever Banana Republic store in Russia through its franchisee channel. Moreover, the company is going to open its first ever Gap store in Serbia on coming Friday, which will represent its 200th franchise store.
Gap in Russia
The Banana Republic store, located in AfiMall City, is the largest shopping and entertainment complex in Moscow city. The company believes that the consumers in Russia have more disposable income compared with the average western consumers, making the country a viable location for introducing Banana Republic's luxurious lifestyle collections at approachable prices.
Gap introduced its products in the Russian market through its first Gap store in 2008, and since then, the company has increased its franchise store base count to 11, of which 9 are located in Moscow. Gap started offering its Gap and Banana Republic products online to the Russian consumers through its international online shipping provider in 2010.
Fiba Holding will manage the store under Gap's existing franchise agreement. Gap's existing franchise stores in Turkey and Ukraine is also managed by Fiba Holding.
Banana Republic stores consist of lifestyle collections at affordable prices and include ready-to-wear collections for men and women, apparel, handbags, jewelry, fragrance and eyewear. Banana Republic is a division of Gap Inc. and has over 600 stores in the United States, United Kingdom, Canada, Italy and Japan.
Gap in Serbia
The first ever Gap franchise store in Serbia will open on coming Friday at Knez Mihailova Street in the capital city of Belgrade. According to the company, as the store is located at the heart of the city, the ongoing plans for modernization will provide a perfect platform for introducing Gap in the Serbian market.
The stores will include a wide selection of simple, easy to wear pieces that form the foundation of any wardrobe, under its Gap, GapKids and babyGap collections. The store in the country will be managed under Gap's existing franchise agreement with one of Greece's leading retail, commercial and industrial firms, The Marinopoulos Group. The Greek company also manages Gap's franchise locations of Gap brand in Greece, Bulgaria, Croatia, Cyprus and Romania.
Gap intends to boost its market share in $1.4 trillion global apparel market and hence is focusing on enhancing its franchise store base counts. The company has increased its franchise store count to about 200 across 26 countries over the last 5 years.
Currently, the company operates its business in 32 countries. Further, Gap wants to increase its franchise store base counts to about 400 by 2014.
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories, and personal care products for men, women, children and babies. Its flagship brands include Gap, Banana Republic, Old Navy, Piperlime and Athleta.
Further, in a drive to boost international operations, Gap consolidated its foreign business under one umbrella while operating from London. Lackluster sales in North America compelled the company to explore business in other shores. In order to counter the domestic market saturation, Gap is aiming to generate 30% of total sales from its overseas operations and online business by 2013.
Gap competes with national and local department stores and discount stores, such as American Eagle Outfitters Inc. (AEO) and The TJX Companies Inc. (TJX). Currently, the company maintains a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.
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