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Gap to expand into China, resume TV advertising

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New York City Gap told investors and analysts on Thursday that it will continue to expand internationally, and plans to open its first Gap store in China next year.

In addition, the company plans to expand its outlet store presence abroad, and launch online businesses in Canada and the United Kingdom, also in 2010, as part of a broader turnaround effort. It also will resume television advertising in November for its namesake brand after a two-year hiatus. The chain plans to reduce square footage by 10% during the next five years and increase its marketing spending by $25 million in the third quarter and by $45 million in the fourth quarter.

“Old Navy’s performance this year has shown what we can deliver through consistent products, re-invigorated marketing, and an enhanced store environment,” said Glenn Murphy, chairman and CEO of Gap. “With our improved economic model, we’re ready to step up our investments and strategies to regain market share and expand our international platform.”

International and online businesses combined have grown about 20% to almost one-fifth of Gap's total in the past two years, Murphy said at the meeting in New York City. Gap has franchised locations in 25 countries besides its company-owned shops in the United States, United Kingdom, Canada and Japan, as well as some in Ireland.

Murphy said that the company’s online business hasn't lost market share in five years. It has grown from $595 million in sales in fiscal 2005 to more than $1 billion in the latest fiscal year.

Gap also said its Old Navy division plans to roll out a new store design in about 50 locations by the end of 2009.

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