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Nov 22, 2010
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Clothing retailer Gap enters Italy in fashion mood

By
Reuters
Published
Nov 22, 2010

MILAN | Sat Nov 20, 2010 - U.S. clothing retailer GAP Inc opened its Milan flagship on Saturday, the first of three wholly owned stores in the fashion-hungry country, as it aims to spur sales outside its mature home market.

Gap
Gap store opened in Milan since 20/11

The owner of Gap, Banana Republic and Old Navy chains is tapping into international markets such as China and South America to offset tepid growth at home.

The company's same-store sales, a key measure of retail performance, were flat in the third quarter.

"Italy was the really important step for us, as it is among the top five apparel markets globally," Stephen Sunnucks, President Gap Inc. Europe, told Reuters in a phone interview.

"Italians spend nearly three times as much on fashion as a U.S. consumer does," he said.

Around 74 percent of the $1.4 trillion global apparel market is produced outside the United States and Canada.

Gap is almost completely the reverse, Sunnucks said, with only 12 percent of its business internationally.

"We have been growing fast but we still have an awful lot more to go," he said.

Gap expects to be in 80 countries by the end of 2010, compared to 25 at the start of the current fiscal year, helped by online and outlet sales.

Known for its American casual clothes, Gap is opening its flagship store in Milan's top shopping district, near the central Duomo cathedral, a popular spot for tourists and shoppers flocking every day to fast fashion chain stores.

Gap plans to open an adjacent Banana Republic store, betting on the brand's more upscale offer, as early as December.

Another wholly-owned Gap store is expected to open in Rome in 2011, the company said.

The retailer, whose European stores are already in Britain, France and Ireland, is also considering operating outlets in smaller Italian cities and boosting its online offer.

Gap
Inside Gap's new flagship in Milan

"Our aim is to maximise our sales. Our customers can shop on the high street, in outlet malls or from home through the online channel," he said.

Sunnucks said Gap has no current plans to expand its lower-priced Old Navy chain in Europe or in other countries.

To better respond to the Italian appetite for designer clothes, the retailer has teamed up with Italian fashion house Valentino to create a seven piece collection, featuring multi-frilled long-length parkas and cargo trousers.

Gap has improved its high-profile offer of jeans and black trousers in an attempt to regain shoppers lured by competitors such as Kohl and Abercrombie & Fitch.

"Consumers are more and more mixing products from high street and designers. This collaboration is a great step forward for both Valentino and Gap," he said.

Gap's shares were down 39 cents at $20.52 on the New York Stock Exchange.

By Antonella Ciancio

(Reporting by Antonella Ciancio; Editing by Paul Casciato)

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