FINANCE

Gap Expands Franchises to Mexico, Egypt, Jordan

BY CSA STAFF

San Francisco Gap Inc. said Friday it signed a deal to allow Mexican department store chain Distribuidora Liverpool SA de CV exclusive rights to sell Gap-brand merchandise in franchise stores starting next spring, according to the Associated Press.

Gap had previously worked with Mexico’s Liverpool through a wholesale agreement, introducing Gap apparel “in a limited manner” to Mexican consumers.

In a move to further drive international growth, Gap also expanded its agreement with Fawaz Alhokair Group, which recently opened Banana Republic in Saudi Arabia, to open Gap and Banana Republic franchises in Egypt and Jordan over the next five years.

The first Gap stores are expected to open in Egypt and Jordan for the 2008 holiday season. The first Banana Republic stores are expected to open in Jordan in the spring of 2009 and in Egypt for the 2009 fall season.

Since Gap Inc.’s franchise program began two years ago, more than 70 Gap franchise stores and nearly 30 Banana Republic franchise stores have opened.

The company also has plans to open Gap and Banana Republic franchise stores in Bulgaria, Croatia, Cyprus, Romania and Russia over the next 5 years.

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99 Cents Only to exit Texas market

BY CSA STAFF

CITY OF COMMERCE, Calif. 99 Cents Only Stores announced that it will exit the Texas market where it has 48 stores to focus on its core markets of California, Arizona, and Nevada, where it has 230 stores which contribute approximately 90% of the company’s sales.

Despite years of positive same-store sales, the companys Texas stores were only generating slightly more than half of the average sales of its non-Texas stores. Additionally, the companys Texas operation remains unprofitable. Based on its recently completed strategic review, the company now believes that even if it continued to invest in its Texas operations over the next few years and was successful in achieving substantial sales increases, and closed its most unprofitable stores and right-sized its distribution center, the result would still likely be only a minimal profit providing an unacceptable return on investment to justify the substantial cost and effort.

Eric Schiffer, ceo of 99 Cents Only Stores said, After more than five years of hard work by many talented associates, we have made the painful decision to cease operation of our Texas stores. Although progress was continually made over the years, we were still losing money in Texas and we determined that it was not likely we would achieve profitability in the near future or attain an acceptable level of return on investment in the long term. 

Based on the companys unaudited financial analysis of the prior four quarters ended June 28, revenue associated with Texas operations was approximately $120 million per annum. Operating income was a loss of approximately $15 million per annum (without allocation of any non-Texas costs or overhead), or, after applying the companys estimated annual effective tax rate, approximately 15 cents in loss per diluted share.

The impact of this decision on the companys long term profit improvement program is expected to be positive. The cost structure of the Texas market on a percentage of sales basis was higher in all categories than the companys other markets.

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Sears.com launches 3D shopping experience

BY CSA STAFF

ARMONK, N.Y. Sears has partnered with My Virtual Model to launch a 3D visual search function on the updated Sears site. According to Sears, it is the first retailer to apply both a visual search and virtual model to an entire catalogue online. Sears.com said it plans to go live with visual search in late October.

The Sears site will enable shoppers to search on a specific style — such as long-sleeve tunic shirts or cropped cargo pants — and find products from the company’s catalogue of clothing, shoes and accessories using 3D images versus words. Shoppers can create countless combinations using a virtual model they can build and personalize to match their measurements — height, weight, body shape — and a headshot photo to ensure that the style, color, pattern and fit are right. The 3D angle allows users to view garments on themselves from the front, side and back, and shoppers can also email images of their looks to friends and family to help them make final purchasing decisions.

“Sears is transforming the online shopping experience by offering consumers cutting edge visual search and virtual model capabilities,” said Rob Mills, vp of Sears online business unit. “By allowing shoppers to visually search for and view items in 3D, to see how they’ll actually look on themselves in various combinations, and virtually share their finds with friends and family, Sears is providing shoppers with a superior social and e-commerce experience that we believe will increase satisfaction and loyalty.” 

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