By Laurie Burkitt and Suzanne Kapner
SHANGHAI--U.S. clothing chain Gap Inc. is looking to China, one
of the world's fastest-growing and competitive apparel markets, to
offset sluggish sales back home.
The San Francisco company, which operates Gap, Old Navy, Banana
Republic and Athleta, plans to open 25 new Gap stores and up to 10
Gap outlet stores in China in 2014, said Jeff Kirwan, president of
Gap's China division, in an interview Saturday. Currently, the
company has 80 stores there.
"The opportunity in China is undeniable," said Mr. Kirwan,
adding that Gap is seeing strong growth in its China-based retail
outlets and online.
Gap is also rolling out its lower-end Old Navy brand to cater to
China's cost-conscious consumers, with plans to open five this
year, Mr. Kirwan said. It launched its first, a 22,000-square-foot
store, in Shanghai on Saturday.
Gap has focused on international expansion to counter slowing
growth at home. U.S. sales at its namesake brand fell about 7% in
the fiscal fourth quarter to $1.05 billion, compared with $1.13
billion a year earlier. U.S. sales of Old Navy and Banana Republic
were down in the period as well.
The company had net income of $307 million in the quarter ended
Feb. 1, compared with $351 million a year earlier. Net sales fell
to $4.58 billion from $4.73 billion a year earlier.
U.S. retailers have been struggling with falling mall traffic
and a harsh winter, including heavy snow fall that has forced
retailers to close some stores for part of January and
February.
Demand for clothing in China is high, with sales of apparel in
urban areas projected to reach $156 billion by 2017, up 58% from
2013, according to estimates from the Boston Consulting Group.
Sales jumped to $99 billion in 2013, up 29% in 2011, the
consulting firm said.
Write to Laurie Burkitt at laurie.burkitt@wsj.com and Suzanne
Kapner at Suzanne.Kapner@wsj.com
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