The ubiquitous clothing retailer Gap has been filling closets with jeans and khakis, T-shirts, and poplin since the Woodstock era. The firm, which operates about 3,300 stores worldwide, built its iconic casual brand on basics for men, women, and children, but over the years has expanded through the urban chic chain Banana Republic, family budgeteer Old Navy, online-only retailer Piperlime, and Athleta, a purveyor of activewear. Other brand extensions include GapBody, GapKids, and babyGap; each also has its own online incarnation. All Gap clothing is private-label merchandise made exclusively for the company. From the design board to store displays, Gap controls all aspects of its trademark casual look.
The Gap rings up about three-quarters of its sales in North America. Asia, including Japan and China, is the retailer's second biggest market accounting for about 8% of sales, followed by Europe (the UK and Ireland, France, Italy) contributing about 6%. Gap has 200-plus franchise stores across Asia, Australia, Eastern Europe, Latin America, the Middle East and Africa.
Sales & Marketing
Gap spent $548 million on advertising in fiscal 2012 (ends January), up from $516 million and $513 million in 2011 and 2010, respectively. The company communicates with consumers via television and print.
After posting its first sales increase in five years in fiscal 2011 (ends January), Gap's sales again headed south in fiscal 2012, declining by nearly 1% vs. the prior year, while net income tumbled by about 31%. The company blamed a host of problems beyond its control -- including continued high unemployment in North America, the debt crisis in Europe, the tsunami and earthquake in Japan, and the steep rise in the price of cotton -- for its woes. However, it also owned up to product challenges at home and abroad, which hurt sales. Indeed, sales at stores open at least one year (a key indicator of a retailer's health) fell across all three of the company's main chains in North America and at its stores overseas, resulting in an overall 4% decline for the year, compared with an increase of 2% in 2011. The lackluster financial performance is evidence that Gap continues to struggle to get fashions people want -- and will pay full price for -- into its stores.
Gap is working hard to get its groove back in the US and expand its brand globally. As in recent years, Gap continued to close more stores than it opened in North America and grow its retail presence in Europe and Asia, where it operates more than 200 and about 185 stores, respectively, in fiscal 2012. It doubled the number of Banana Republic stores in Europe (from 5 to 10 locations) and increased the number of Athleta stores in North America by a factor of 10. Direct sales (e-commerce and catalog) increased 11% to $1.56 billion, compared with $1.3 billion in the prior year.
Gap, which rings up nearly 75% of its sales in North America, is bent on becoming a global retail presence, even if it means investing overseas while economies in Europe and Asia (especially Japan) struggle. Going forward, it plans to begin opening Old Navy stores outside North America and add more stores in China (the source of about 25% of its clothing). After opening stores in Paris and London, Gap chose Italy as the next stop on its European expansion tour, with stores debuting in Milan in late-2010 and Rome in 2011. More recently, it has been mining retail markets in Africa, Asia, and Latin America, including Panama, Chile, and Colombia, to combat sagging sales at home and to breath new life into its Gap, Banana Republic, and Old Navy brands. The retailer put down more permanent roots in Mexico in late-2012 when it opened a standalone store in bustling Mexico City. More stores are planned for Colombia and Uruguay by 2013.
Gap continues to promote its lesser-known online-shoe brand Piperlime and Athleta, a direct-marketer of women's active wear. Since acquiring Athleta in 2008, Gap has added 10 retail stores to Athleta's portfolio.
The founding Fisher family owns about 38% Gap Inc. – less