Gap considers fourth chain in US in bid to spur growth

Gap is looking at ways of restarting its international expansion, and considering a fourth chain in the US, as the fashion retailer seeks new sources of growth in the wake of its two-year turnaround.

Mr Paul Pressler, Gap's chief executive, said he was examining how the Gap chain could expand further in its overseas markets of the UK, France and Japan.

He was also looking at other markets where the Gap brand might be introduced, and at whether its other North American chains - the value-orientated Old Navy and the upmarket Banana Republic - could be exported overseas.

Mr Pressler said he could envisage both Banana Republic and Old Navy in Europe, but any transatlantic move would depend on further analysis of potential market size and investment returns.

International expansion has largely been on hold for three years as Gap has pruned its 3,000-plus stores following over-ambitious expansion in the 1990s. Its last significant overseas move was to close its 10 stores in Germany, saying that the market was too difficult.

Mr Pressler said he did not rule out using franchising, licensing or partnership arrangements overseas, rather than company-owned stores. He has reversed the falling sales that dogged Gap for two years before his arrival by repositioning its chains and using detailed customer research to reconnect with consumers.

However, he is under pressure from Wall Street to spell out where future growth will come from. Mr Pressler said he expected to present his growth strategy early next year.

As well as overseas expansion, Mr Pressler said he was studying a possible fourth US chain.

"We also believe that we need a fourth brand, and some day we'll need a fifth brand," he said. "We're not looking for little mom-and-pop brands, we're looking for brands that have large substantive market share."

He refused to confirm or deny speculation that a fourth chain would target "baby boomer" women aged 35-50, following the Gap chain's repositioning towards 20- to 30-year-olds. - (Financial Times Service)