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Restructuring accelerates Gap’s global growth

BY CSA STAFF

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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Ill. governor tours nearby green Walgreens

BY CSA STAFF

DEERFIELD, Ill. — As part of Earth Month in Illinois, Gov. Patrick Quinn Tuesday morning toured a Walgreens drug store in Oak Park, Ill., that features the first geothermal energy system used in a chain drug store in the country, Walgreens stated in a release.

The system, which went live when the store opened last October, has reduced the store’s expected energy usage by 60%.

"We are proud to showcase our commitment to the environment here in Oak Park with Gov. Quinn," Walgreens president and CEO Greg Wasson said, who accompanied the governor on the store tour. "Geothermal energy is an important way we can reduce our carbon footprint, and through the innovative, sustainable design of this store, we have made it a reality."

The store also features a Level 2 electric vehicle charging station, which can add up to 25 miles of range per hour of charge. Working with 350Green, Walgreens plans to install charging stations at about 30 additional Chicago-area stores beginning this summer. The company has already initiated charging station installments across the Houston and Dallas markets.

"For our customers with electric vehicles, we will offer some of the area’s best corners to help give people the confidence to drive longer distances while having access to charging stations," Wasson said.

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Year of the Rabbit

BY Katherine Boccaccio

I’m not much of a follower of astrology and the signs of the zodiac, but I do know that 2011 is the Year of the Rabbit on the Chinese calendar.

It seems somehow fortuitous that speed and agility define a year that is all about economic recovery. And retail is moving forward at a rate that, while not exactly hare-like, is at least faster than the proverbial tortoise.

A report released in April jointly by the International Council of Shopping Centers and PNC Real Estate Research, entitled “U.S. Retail Real Estate Supply Conditions,” tracked and analyzed announced store closings and GLA for fourth quarter 2010. I realize at first blush that a report about contraction might not illustrate forward progress, but it suggests that retailers were focused on right-sizing in 2010. And a streamlined ship can travel at a much faster clip than a tug boat hauling excess cargo.

According to the report, Blockbuster and Talbots led announced store reductions in the final quarter of 2010, accounting for 41% of total store closings with 182 and 100 units to be shuttered, respectively. A.J. Wright, a division of TJX Cos.,
announced 71 store closings in fourth quarter, Duckwall-ALCO closed 44, regional furnishings player Lack’s closed 36, Borders closed 17 stores, and discount department store chain Loehmann’s announced 15 closings and declared bankruptcy.

During the fourth quarter, some 700 retailers and restaurants announced expected closings, consisting of approximately 10.4 million sq. ft. and representing 0.07% of the total inventory of retail space within the United States.

However, the report emphasized that the improving economy helped to spark stronger profitability in the retail sector as a whole — and that occupancy is beginning to trend higher as more retailers are cautiously returning to expansion.

Chain Store Age’s April/May issue — with the annual real estate section geared toward the ICSC’s RECon 2011 show in Las Vegas held May 22 to 25 — underscores the idea that talk of expansion has supplanted contraction discussions in retailer corporate staff meetings. In our development coverage, beginning on page 34, we highlight the top 12 developments to open in 2010, among them the massive Peninsula Town Center development in Hampton, Va. The developers of Peninsula Town Center — as did all of the shopping center companies interviewed for the story — talked about successful leasing in a recovering economy.

“We opened Peninsula Town Center in the most challenging retail environment in our lifetime, with the two highest-volume department stores in the metroplex, over 70 specialty stores and 13 restaurants and a movie theater,” said Anne Mastin, executive VP leasing for Steiner, codeveloper on the project. “This was an amazing accomplishment in light of the economic climate of 2010.”

There is good reason to be hopeful that next year will show even more progress. For fun, I checked the Chinese calendar: 2012 is the year of the Dragon. I like the sound of that.

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