Gap details growth strategy; will explore Piperlime store format

NEW YORK — Gap executives reaffirmed its commitment to reducing square footage at home, aggressive international expansion and online growth during a presentation at Gap Global Creative Center in New York City. Gap also revealed that its online-only Piperlime division will explore a store concept next year and is testing men’s apparel.

“The combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide,” said Glenn Murphy, chairman and CEO of Gap.

On the home front, Gap said it is on track to meeting its goal of a 10% reduction in overall store square footage (as compared with 2007) in North America by fiscal year 2012.

The company continues to rebalance its specialty and outlet stores, resulting in about 700 Gap specialty stores and about 250 Gap Outlet stores by year end 2013. At Old Navy, the brand’s strategy is to have roughly the same number of stores in North America with a smaller footprint, and expects to potentially remove another 1 million sq. ft. by fiscal year end 2013.

The company’s new athletic apparel brand, Athleta, is on target to open 10 stores in North America by the end of fiscal year 2011, and to have 50 stores by the end of fiscal 2013,

The retailer said its e-commerce sales were up 19% in the first half of the year. It expects the direct division to hit $1.5 billion in revenue by yearend, and to reach $2 billion in revenue and operating income of $500 million by the end of fiscal 2014.

Gap said it will debut Old Navy abroad within 18 months, in Japan. It plans to nearly triple the number of Gap stores in greater China from roughly 15 by yearend to about 45 by the end of 2012. The first Gap flagship in Hong Kong is set to open in a matter of weeks on Queen’s Road, as is the company’s first Banana Republic flagship in Paris later this year.

Gap International president Stephen Sunnucks said the company’s new stores are performing well in China and Italy, and the franchise business experienced 48% revenue growth in the first half of fiscal 2011. The company expects to double its franchise stores to about 400, by the end of fiscal 2014.

The company reaffirmed its fiscal 2011 full year earnings per share guidance of $1.40 to $1.50.