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Gap Reveals Plans For Heavy Expansion into China

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Gap Inc. has set its sights on heavy expansion in China among other global growth initiatives, and on building up its current omnichannel offerings in order to create a “world-class shopping experience” for consumers.

At the retailer’s annual investor meeting Wednesday, Gap executives discussed driving the brand’s long-term growth with technology and innovation and by expanding into both the world’s largest market and the company’s greatest locale for future growth.

Glenn Murphy, Gap’s chairman and chief executive officer, said, “We have the world’s best collection of American brands coupled with a strong economic model and runway for global growth.” He added, “As the retail landscape evolves, we continue to deliver on our omni-channel roadmap and focus on owning the shopping experience of the future.”

Gap has already launched three omnichannel initiaves to much success: reserve in store, find in store and ship from store.

Now the retailer wants to test a new order in store function where shoppers in brick-and-mortar locations will have instant access to Gap’s expanded product offerings online.

The company will also expand its reserve in-store offerings, bringing the service to all U.S. Gap stores by the end of the second quarter. Online and mobile shoppers will now be able to reserve items at more than 1,000 Gap and Banana Republic locations.

Murphy stressed Gap’s awareness that digital driving retail today and the company intends to continue making advances that will bridge the “growing digital world with its physical stores.”

“Our online business continues to grow quickly,” Sabrina Simmons, Gap EVP and chief financial officer said during the investor meeting. “In just the last five years our sales in this channel have doubled to about 2.3 billion dollars.”

Beyond the omnichannel upgrades, Gap intends to increase its share in the global apparel market through expansion in Asia, with the greatest emphasis on China.

Gap debuted a 22,000 square-foot Old Navy, a brand it also operates, in mainland China last month to much fanfare and, building on that, the retailer said it expects sales in China to reach $1 billion in three years.

Simmons said Gap has opened over 200 global outlets in the last five years. “In 2014 we expect store footage to increase by about 2.5% following the same pattern of growth,” she said, with much of that expansion taking place outside of the U.S.

“Our goal is to strike a good balance between growing the top and bottom line, as well as returning excess cash to shareholders,” Simmons said. “Over the past five years, we have increased revenue $1.6 billion, grown EPS at a 15 percent compound annual growth rate and returned an average of $1.6 billion in cash per year via share buybacks and dividends.”

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