Gap Inc. in $40 million deal to sell Greater China business to e-commerce firm
Gap Inc. continues on its path to serve international markets through a more” asset-light, cost-effective model.”
The apparel retailer has agreed to sell its Greater China business to Baozun Inc., a Shanghai-based e-commerce provider and digital commerce enabler. The deal is an all-cash transaction with a primary consideration of $40 million, subject to adjustments within a limit of $50 million.
Gap Greater China opened its first location in China in 2010. It currently operates more than 200 stores in mainland China and 16 in Taiwan, and counts close to 30 million loyalty members in the region. Baozun has been Gap Greater China’s e-commerce service partner since late 2018. It also operates online businesses for brands that include Nike and Zara.
Under the terms of the deal, Baozun will operate Gap’s in-market site and stores under a franchise agreement. Baozun has also been granted exclusive rights to design, manufacture, promote and distribute all Gap products in the Greater China area.
“The growth that we are unlocking through local partnerships with market experts like Baozun is allowing us to not only connect with new and existing customers, but to provide them with personalized, service-oriented experiences,” stated Mark Breitbard, president and CEO of Gap brand. With its best-in-class omnichannel technology and deep expertise in data management and digital business, Baozun has helped drive impressive results in our online growth and penetration of the Greater China market in the past four years, and we feel confident about our partner’s future value-creating China-for-China plans for Gap Greater China.”
In a memo to employees, the company noted that, in October 2020, Gap Inc. announced the strategic review of its company-operated Gap businesses around the world.
“The news shared today is the result of the review of Gap China,” Gap wrote. This will allow Gap to serve the market through a more asset-light, cost-effective model and to benefit from the local and technology expertise of Baozun.”