Gap Picks Up Old Navy Executive For Ambitious International Expansion

by Trefis Team
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Upside
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Market
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Trefis
GPS
Gap Inc.
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With the competition in domestic teen apparel market intensifying, Gap Inc. (NYSE:GPS) is pushing for international expansion to accelerate growth. Setting itself a goal for international and online sales to make up 30 percent of its total revenues by 2013, the company recently rolled out its first Old Navy store outside North America in Japan. [1]

The store opening comes on the heels of the announcement of Stefan Larsson as Global Brand President for Old Navy. [2]  Gap competes with other specialty retailers like Aeropostale (NYSE:ARO), American Eagle (NYSE:AEO), Abercrombie & Fitch(NYSE:ANF) and Urban Outfitters (NYSE:URBN).

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Gap aiming big internationally

As the competition heats up in the domestic market, Gap is banking on international expansion to fuel its growth ahead. Starting with the unification of its international business in April last year, the company has taken numerous initiatives to drive its international growth. Be it hiring of executives such as Larsson specifically for international business, and its forays into new markets such as Latin America and China, the company has looked to aggressively expand internationally in 2012. And with the first Old Navy store opening in Japan, the company has made clear its international aspirations for Old Navy, which is Gap’s highest contributing business segment in North America.

For the success of Old Navy in Japan, Gap is relying on Old Navy’s value-priced fashion image in the domestic market and the expertise of Stefan Larsson, who comes to gap after nearly 15 years experience with fast-fashion retailer H&M. Experience of Mr Larsson in fast-fashion retailing will be a big plus for Old Navy international, as he can ensure the capture of current fashion trends quickly to the store shelves, an issue which has been a major dampening factor for Gap historically.

Our price estimate for Gap Inc. stands at $29.89, which is roughly similar to its current market price.

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Notes:
  1. Old Navy enters Japan, Source: Gap’s IR []
  2. Stefan Larsson to join Gap as Global Brand President for Old Navy, Source: Gap’s IR []
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