Restructuring accelerates Gap’s global growth

Gap Inc. wants international and online sales to account for 30% of its revenues within two years and a restructuring announced this week is expected to play a role in facilitating that growth.

The company said it would consolidate four existing international business units into one under the leadership of Stephen Sunnucks, a 30-year retail veteran who joined Gap five years ago.

“Our successful openings in China and Italy have given us further evidence that we have a strong game plan for entering and expanding into international markets through a unique combination of online, specialty retail, outlet and franchise stores,” said Glenn Murphy, chairman and CEO of Gap. “Bringing our four international business units under the leadership of a proven global retail executive like Stephen Sunnucks allows us to leverage resources, operate consistently, and grow the business at an accelerated rate.”

Sunnucks is credited with successfully guiding the growth of Gap and Banana Republic in Europe as well as overseeing the company’s rapidly-expanding franchise operations. With the decision to consolidate international businesses under Sunnuck’s leadership he will be responsible for company’s brands outside North America consisting of about 530 stores in 30 countries.

“As we’ve expanded into new countries and introduced additional brands from our portfolio, our distinctively American aesthetic has resonated very well, everywhere from Milan to Shanghai to Sydney. We have the flexibility to adapt our formats for each market so that we can gain a larger share of the $1.4 trillion global apparel retail market,” Sunnucks said.

Most of the limited growth Gap has experienced in recent years is due to its international expansion and online efforts. Just five years ago, Gap operated in only eight countries and its products were sold online in only the United States. Today, the company operates stores in 32 countries and sells online in a total of 90 countries.

Towards the end of 2010, the company opened its first Gap and Banana Republic flagship stores in Italy, and its first Gap stores and an online retail site in China. The new stores in Milan and China have been among the company’s top 10 percent performing stores in the world since their openings. The company expects to open its first Old Navy unit in Japan in 2012.

In the year ahead, the company plans to open about 190 stores worldwide, including about 10 stores each in China and Italy. It plans to double the number of franchise stores to 400 by 2015. Gap ended last year with sales of $14.6 billion.

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