Gap to expand into China, resume TV advertising
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.
‘Straight Talk’ about Walmart’s new no-contract cellular service
BENTONVILLE, Ark. Walmart announced that it will launch Straight Talk, a new solution in no-contract cellular, exclusively at more than 3,200 Walmart stores nationwide starting Oct. 18. According to the company, Straight Talk will bring to the market a new low price for no-contract wireless service with two prepaid plans now available to customers nationwide at $30 and $45 a month. Straight Talk will only be available in Walmart stores and online at www.Walmart.com and www.StraightTalk.com.
Walmart said it initially offer customers the option of an “All You Need” 30-day plan for $30 a month that includes 1,000 minutes, 1,000 texts and 30MB of mobile Web access, nationwide coverage and 411 Information calls at no extra charge or its Unlimited 30-day plan for $45 a month that includes unlimited minutes, unlimited text, unlimited mobile Web access, nationwide coverage and unlimited 411information calls at no extra charge
“It has been very encouraging to see the excitement and response to the Straight Talk pilot in 234 stores that began last summer at Walmart,” said Greg Hall, VP media services for Walmart U.S. “In light of the savings customers continue to need, we have worked very quickly to extend this offering to all of our Walmart customers nationwide, and just before the holidays.”
Spartan Stores experiences decreased comps
GRAND RAPIDS, Mich. Spartan Stores reported that consolidated net sales for the 12-week second quarter were $610.2 million compared with $626.8 million in the same period last year. According to the company, sales were negatively affected by price deflation in certain primary product categories, significantly lower retail fuel prices, a shift in the mix towards more private label products and the general economic environment.
Net earnings for the quarter were $10.4 million, or 46 cents per diluted share, compared with $10.6 million, or 48 cents per diluted share in last year’s second quarter. Last year’s second-quarter net earnings included a loss from discontinued operations of $1 million, or 4 cents per diluted share, related to the Pharm store exit and operational wind down costs.
Second-quarter retail net sales increased 11.3% to $360.2 million from $323.5 million in the same period last year. The retail segment experienced a 5.1% decline in comparable-store sales due to significant deflation in the meat, produce and dairy categories, competitive store openings, unseasonably cool weather in Michigan and the weak economic environment.