Gap enters Australian market with Melbourne franchise
Gap Inc., the operator of more than 3,100 clothing stores, will start a push into the Australian retail market with a franchise in Melbourne this year.
The retailer will work with Brand Republic Pty Ltd., a unit of Busby Holdings Australia Pty Ltd., to establish franchises in the country, San Francisco-based Gap said today in a statement. Sydney will get a store in 2011, with more locations to follow, Stefan Laban, vice president of Gap s strategic alliances division, said in a telephone interview.
Gap has opened more than 130 franchise stores in countries including Thailand, Russia and Israel since signing its first deal in 2006. Australia will be the 24th country in which the company has a franchise agreement. The retailer is set to open company-owned Gap stores in China and Italy this year, the first in those countries.
Gap has a great opportunity to be a great global brand, said Laban, who joined Gap in January from Nike Inc., where he helped start that company s franchise business in Europe. In some of these franchise markets, we have just scratched the surface.
Gap fell 15 cents to $23.06 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have gained 10 percent this year.
Urban Population
The company researched the Australian market for three years before deciding to sell franchise rights, Laban said. The retailer liked that about half of the country s 22 million people live in cities and few competitors have a presence there, he said.
Australians gravitate to the U.S., Laban said. They know the brand. We re confident we can do well there.
Under the franchise agreements, Gap sells its inventory to the stores and the franchisees keep the revenue, Laban said. The company builds the stores and trains staff, while the partners share local advertising costs, he said.
The performance of Gap s franchises isn t broken out and is included in sales totals from regions outside the U.S. and Canada, which together accounted for 12 percent of the company s $14.2 billion of revenue in the fiscal year that ended Jan. 30.
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