The Gap Inc. (GPS), as part of its expansion project in the $1.4 trillion global apparel market, has taken a maiden step to bring its brand to Africa. The company is expected to unveil the latest trend in Egypt and Morocco in July and October, respectively.
The company has plans to open a Gap store in Egypt while The Gap and Banana Republic stores in Morocco. Only last year, The Gap had taken an initiative to sell its products in Egypt, Morocco and South Africa via its international online shipping provider.
Through contracts with its existing franchise — The Fawaz Al Hokair Group — Gap expects to introduce its first store in Egypt in the Mall of Arabia, located in the capital city of Cairo. The company also plans to open two more Gap stores in Cairo’s City Stars Mall and Sun City Mall in October.
In Morocco, the company expects to open its first Gap and Banana Republic stores in Casablanca. Morocco has a flourishing retail market and a growing urban population, an advantage that the company would like to cash in on in its efforts to spur growth. The Gap through a new franchise agreement with Aksal Group will first make its products available to Moroccan customers in the city’s new Morocco Mall.
The leading global specialty retailer has lately consolidated its foreign business under one division from London. The rationalized division, which is headed by Stephen Sunnucks, is responsible for all company-operated and franchised stores across Europe, the Middle East, North Africa, Asia Pacific and South America.
The Gap currently has expanded its franchise store base to more than 180 and stretched out its footprint from 2 to 29 countries which includes Asia, Europe, Latin America, the Middle East, Australia, Chile, Serbia and now Africa. The company expects to increase its franchised store base to 400 by 2014.
Based in San Francisco, California, The Gap Inc. is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products for men, women, children and babies. Its flagship brands include Gap, Banana Republic, Old Navy, Piperlime and Athleta.
However, The Gap operates in a highly fragmented market and competes with well-established rivals like American Eagle Outfitters Inc. (AEO) and The TJX Companies Inc. (TJX).
The Gap’s shares maintain a Zacks #4 Rank, which translates into a short-term Sell rating. Our long-term recommendation on the stock remains Neutral.
