Leading global specialty retailer, The Gap Inc. (GPS) announced the opening of an online store on Taobao, China’s biggest e-commerce platform. E-commerce is the next economic frontier for many, and China is now leading the pack in terms of maximizing the potential of the Internet compared with the West.
Gap which is already operational in China with four company-owned Gap stores in Shanghai and Beijing and a website at www.gap.cn will offer a wide selection of stylish products ranging from Gap, GapKids and baby gap through its gap.tmall.com online store on Taobao Mall.
Taobao, which began in 2003, currently has more than 800 million product listings at any given time and serves more than 370 million registered users. Taobao Mall is a business-to-consumer platform that was launched in 2008 and complements its customer-to-customer marketplace. It has more than 30,000 local and global brands and is wholly owned by Alibaba Group.
Last month Gap reported an increase in its fourth-quarter net income attributable to rising sales abroad, online and at its higher-priced Banana Republic and lower-priced Old Navy chains. The company said it plans to open about 75 new franchise stores and 50 company-owned stores abroad, including 10 to 15 in China, 8 to 10 in Italy and 25 outlet stores, going forward.
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.
Gap operates in a highly fragmented market and competes with well-established rivals like American Eagle Outfitters Inc. (AEO), J. Crew Group Inc. (JCG) and The TJX Companies Inc. (TJX). With the reduction in disposable income and a cut in consumer discretionary spending due to the recent economic downturn, the company like all retailers is under severe stress to maintain profitability.
Gap’s shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Our long-term recommendation on the stock remains ‘Neutral’.
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