As part of its ongoing international expansion efforts, apparel retail giant Gap (NYSE:GPS) has announced that it will open its first Gap brand store in Egypt next month. [1] This will be followed by a Banana Republic store in Morocco scheduled for opening in October this year. The two new stores will house the company’s flagship Gap brand apparels in addition to GapKids, babyGap collections and Banana Republic’s accessible luxury clothes and accessories for men and women. Gap competes with other specialty retailers like Aeropostale (NYSE:ARO), American Eagle (NYSE:AEO), Abercrombie & Fitch (NYSE:ANF) and Urban Outfitters (NYSE:URBN).
We have a Trefis price estimate of $29.80 for Gap’s stock — a premium of around 64% to the current market price.
The move to expand in the African countries comes following the announcements by Gap Chairman and CEO, Glenn Murphy, to bring the company back on track. Gap is looking forward to reduce its reliance on the North American market, where the sales are declining, by increasing its presence in the developing countries. The company also has plans of entering the retail markets of Serbia and Ukraine. Gap had already started shipping its apparels to Egypt, Morocco and South Africa last year.
The presence in the emerging markets will help Gap tap into the increasing disposable income of the growing middle class in these countries, lending a significant upside to its revenues.
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