Gap (clothing retailer)

The Gap
Type Public
Traded as NYSEGPS
S&P 500 Component
Industry Retail
Founded San Francisco, California, U.S.
August 21, 1969
Founder(s) Donald Fisher
Doris F. Fisher
Headquarters San Francisco, California, U.S.
Number of locations 3,248 (2011)[1]
Area served Worldwide
Key people Glenn K. Murphy
(Chairman and CEO)
Products Clothing
Revenue US$ 14.664 billion (2010)[2]
Operating income US$ 1.968 billion (2010)[2]
Net income US$ 1.204 billion (2010)[2]
Total assets US$ 7.065 billion (2010)[2]
Total equity US$ 4.080 billion (2010)[2]
Employees 134,000 (January 2011)[2]
Divisions Gap
Banana Republic
Old Navy
Piperlime
Athleta
Website Gap.com

The Gap, Inc.[3] (NYSEGPS) is an American clothing and accessories retailer based in San Francisco, California, and founded in 1969 by Donald G. Fisher and Doris F. Fisher. The company has five primary brands: the namesake Gap banner, Banana Republic, Old Navy, Piperlime and Athleta. As of September 2008, Gap, Inc. has approximately 135,000 employees and operates 3,076 stores worldwide, of which 2,551 are in the United States.[4] Gap, Inc. remains the largest specialty apparel retailer in the U.S., though it has recently been surpassed by the Spanish-based Inditex Group as the world's largest apparel retailer.[5]

Despite the company's publicly traded status, the Fisher family remains deeply involved in Gap, Inc.'s business and collectively owns a significant quantity of the company's stock.[6] Donald Fisher served as Chairman of the Board until 2004, playing a role in the ouster of then-CEO Millard Drexler in 2002, and remained on the board until his death on September 27, 2009. Fisher's wife and their son, Robert J. Fisher, also serve on Gap's board of directors. Robert succeeded his father as chairman in 2004 and also served as CEO on an interim basis following the resignation of Paul Pressler in 2007, before being succeeded permanently by Glenn K. Murphy.

Contents

History

On August 21, 1969, Donald and Doris Fisher opened the first Gap store on Ocean Avenue in San Francisco. The store's merchandise consisted of Levi's and LPs. The Fishers had raised $63,000 to open the store,[1] and in one year, Gap's sales had reached $2 million. In 1970, Gap opened its second store, in San Jose, California, and established its first corporate headquarters in Burlingame, California, with just four employees. Gap grew rapidly. By 1973, it had more than 25 stores, including areas outside California—entering the East Coast market with a store in Voorhees, New Jersey. In 1974, Gap began to sell private-label merchandise.

Millard Drexler, was responsible for Gap Inc.'s phenomenal growth in the 1990s. He transformed "the humble discount-jeans emporium with the groovy seventies vibe and goofy jingle into an international arbiter of style and a global megabrand. He had tossed out the Gap’s product line and reinvented it from scratch, redesigned the company’s stores from floor to ceiling, and ushered in breakthrough ad campaigns, from “Individuals of Style” (Whoopi Goldberg, Spike Lee, Lorraine Bracco) to “Who Wore Khakis?” (Andy Warhol, Marilyn Monroe, Picasso). By introducing consumers to stylish-but-affordable basics—khakis, pocket tees, prewashed jeans—Drexler exploded the myth that good taste has to be expensive. He allowed the masses to look good without going broke, and in the process, he not only changed the way the world dressed and built the Gap into a $14.5 billion behemoth. It could be argued that he invented casual chic."

However Drexler was ousted in 2002 after over-expansion and a 29 month slump in sales, amid tensions between himself and the Fisher family. Drexler refused to sign a non-compete agreement and eventually became CEO of J. Crew. One month after Drexler's departure, sales rebounded strongly due to merchandise that he had ordered.[7][8][9] Robert J. Fisher recruited Paul Pressler as the new CEO; Pressler was credited with closing poorly performing stores and paying down debt, however his use of focus groups didn't help Gap Inc. to recover its leadership in fashion. After two poor holiday sales seasons, Pressler resigned in 2007 and was succeeded by Robert on an interim basis.[10][11][12]

Patrick Robinson was hired as chief designer in 2007, however he was dismissed in May 2011 after sales failed to pickup. Robinson enjoyed critical success, particularly in international markets. His range of Perfect Black Trousers, launched in 2010, quickly became a front row uniform for fashion editors attending catwalk shows. He also masterminded sellout collections in collaboration with Stella McCartney, and with the cult shoe designer Pierre Hardy. In 2011, Robinson attracted criticism for sticking to a muted, faded-pastel palette which lost out to the juicy brights and stark monochromes at Zara.[13][14][15]

In October 2011, with U.S. sales eroding due to specialty retailers like Abercrombie & Fitch and cheap chic merchants like H&M, Gap Inc. announced plans to close 189 stores (approximately 21 percent of U.S. Gap stores) by the end of 2013. The company, however, plans to expand its presence in China.[16][17]

Brands

Banana Republic, formerly a small retailer selling safari-themed clothing, was purchased by the company in 1983, and eventually was rebranded as an upscale clothing retailer in the late 1980s. Old Navy was launched in 1994, as a value chain with a specialty flair. Forth & Towne, the company's fourth traditional retail concept, was launched on August 24, 2005, featuring apparel targeted toward women 35 and older.[18] On February 26, 2007 after an 18-month trial period, Forth & Towne was discontinued, and the 19 stores were closed.[19] A fifth brand, the online footwear retailer Piperlime, was created in 2006.[20] A sixth brand, Athleta, a women's athletic wear line was added in 2009.[21]

Gap's Sales by Division in Q1 2009[22]

Divisions Total revenue
Gap North America $834 million
Banana Republic North America $475 million
Old Navy North America $1.18 billion
International $369 million
Gap Inc Direct $267 million

Store count

As of April 30, 2011, Gap Inc. had 3,245 company-owned and franchise store locations, compared with 3,232 store locations last year. The company expects to open about 200 store locations and to close about 125 store locations in fiscal year 2011.[1][23] Those in Canada, China, Croatia, France, Italy, Ireland, Japan, UK, and US (excluded Puerto Rico) are company-owned. Stores outside of these countries are owned and operated by franchises.

Gap
Banana Republic
Old Navy
Athleta

Marketing strategy

The Banana Republic stores try to convey a more sophisticated image for an upscale customer seeking "modern, accessible luxury," whereas Gap stores appeal to a broader demographic of customers. The Old Navy chain is designed to appeal to families and younger customers by emphasizing "fun, fashion, and value" through a store experience that aims to deliver "energy and excitement." Although Gap, Inc., along with other retail-store chains, has been criticized for blandness and uniformity in its selling environments, the company maintains that it tailors its stores "to appeal to unique markets" by developing multiple formats and designs.[32]

Products

When Gap was founded in 1969, its targeted customers were younger generations (hence the name of the store, which refers to the generation gap of the time[33]). Gap's originally sold signature blue jeans and white cotton t-shirts, but later expanded to include clothing for men, women and children.[34]

Place

Gap's main opportunity to reach its customer is through its stores. Gap operates stores in the United States, Canada, the United Kingdom, France, Ireland, Korea, Japan and China. The Gap, Inc. also has franchise agreements with unaffiliated franchisees to operate Gap or Banana Republic stores in Philippine, Singapore, Malaysia, United Arab Emirates, Korea, Kuwait, Qatar, Bahrain, Oman, Saudi Arabia, Cambodia, Indonesia and Mexico.[35] As of February 3, 2007, The Gap, Inc. operates a total of 3,131 store locations.[36] In January 2008, Gap signed a deal with Marinopoulos Group to open Gap and Banana Republic stores in Greece, Romania, Bulgaria, Cyprus and Croatia.[37] In February 2009, Elbit Imaging, Ltd. secured a franchise to open and operate Gap and Banana Republic stores in Israel.[38] In August 2010 GAP will be opening its first store in Melbourne, Australia at Chadstone Shopping Centre.[39] In September 2011, Komax will be opening the first GAP store in Chile, due to a franchise.[40] In October 2011, the first GAP store will open in Warsaw, Poland.[41]

Online

The domain www.gap.com attracts over 18 million visitors annually, according to a 2008 Compete.com survey.[42]

The Gap trademark

The original trademark for The Gap was as a service mark for retail clothing store services. The application was filed with the USPTO on February 29, 1972 by The Gap Stores located in Burlingame, California. First use anywhere was on August 23, 1969 and commercial use on October 17, 1969. Registration was granted on October 10, 1972.

A second application was filed by Gap Stores, Inc. on September 12, 1974. This time, the new application was for a trademark filed for Shirts. First use and commercial use for shirts and clothing products was on June 25, 1974. Trademark registration was granted on December 28, 1976.

Both the service mark and trademark are registered and owned by Gap (Apparel), LLC of San Francisco, California.

Trademark dispute

The company owns a trademark to its name, the "Gap", which is also a common English word with multiple definitions. This has led to conflicts over use in other products and locations. For example, the company threatened litigation against Bootleg Gap, a golf course in Kimberley, British Columbia, named after the visible gap in the nearby Bootleg Mountain. After three years of negotiations, and lacking the funds to defend itself in court, the golf course agreed to remove the word "Gap" from its restaurant and 27 holes. It also renamed its clothing line "Bootleg Golf." The legal costs from the negotiations and rebranding delayed landscaping and cart paving projects for the golf course.[43]

Labor practices

In 2003, Gap, along with 21 other companies, was involved in a class action lawsuit filed by sweatshop workers in Saipan. The allegations included "off the clock" hours, where workers were not paid for working overtime, unsafe working conditions, and forced abortion policies.[44] A settlement of 20 million dollars was reached whereby The Gap did not admit liability.[45]

In 2007, Ethisphere Magazine (an industry publication) chose Gap from among thousands of companies evaluated as one of 100 "World’s Most Ethical Companies."[46] Gap, Inc. was ranked 25th by CRO Magazine, another industry publication that is a successor to Business Ethics magazine, in its “100 Best Corporate Citizens” list in 2007.

Nevertheless, the company draws continued criticism over labor practices. In May 2006, adult and child employees of Western, a supplier in Jordan, were found to have worked up to 109 hours per week and to have gone six months without being paid. Some employees claimed they had been raped by managers.[47] Most of these allegations were directed at Wal-Mart (who mostly ignored the claims), while Gap immediately looked into the matter to remedy the situation.[47]

On October 28, 2007, BBC footage showed child labor being used in Indian Gap factories.[48] Gap has denied that it was aware of such happenings and that it is against its policy to use child labour. The one piece of clothing in question — a smock blouse — was removed from a British store and will be destroyed. Ironically, Gap promised to investigate breaches in its ethical policy.[49]

Product Red support

Gap took part in the Product Red campaign (www.joinred.org). In early 2006, they released a special RED collection, including a T-shirt manufactured in Lesotho from African cotton. The expanded Gap Product Red collection was released October 13, 2006. 50%-100% of the profits went to the Global Fund; depending on the item. Gap continued on with Gap Product Red items into the 2007 New Year, especially in the lead up to Valentine's Day, using slogans such as "Admi(RED)" and "Desi(RED)." Product Red has now contributed over $45 million to the Global Fund, more than any other private donation received to date.

Other launch partners included American Express, Apple Inc., Converse, Hallmark, Emporio Armani and Motorola.

Public figures in ad campaigns

Gap frequently features public figures in its print and television advertisements. They have featured over 308 celebrities of various stature in their campaigns. Their commercials featuring songs such as "Lovely Day" remain some of the most successful and memorable usages of television advertising in history.

Management reshuffle

On January 23, 2007, Gap announced that it was replacing CEO Paul Pressler with Robert J. Fisher, chairman of the board and son of the company's founders, and who would lead Gap on an interim basis as it searched for a new CEO. The board's search committee would be led by Adrian Bellamy, chairman of The Body Shop International and include founder Donald Fisher. The company said it would "focus [its] efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline." Robert Fisher stressed his personal ties and 30-year professional history in operating roles at the company and as a board member. He started with the company in 1980 as a store manager and worked his way up the company's merchandising ranks and senior executive leadership positions, including president of Banana Republic and the Gap units. He had joined the board in 1990.[50]

On February 2, 2007, CEO Bob Fisher announced that Marka Hansen, a 20-year veteran of the company who headed the Banana Republic unit, was chosen to lead the Gap unit, replacing Cynthia Harriss, who had been hired by former CEO Pressler in 2004. Hansen had held a variety of positions with the company, mostly in merchandising. Jack Calhoun, an executive vice president for marketing and merchandising became interim president of the Banana Republic unit.[51]

In May 2007, Old Navy laid off approximately 300 managers in the lower volume Old Navy stores to help streamline costs.

On July 26, 2007, Gap announced that Glenn Murphy, previously CEO of Shoppers Drug Mart in Canada, was announced as the new CEO of Gap, Inc.

New lead designers were also brought on board to help define a fashionable image. Patrick Robinson for Gap Adult, Simon Kneen for Banana Republic, and Todd Oldham for Old Navy.

On October 6, 2010, Gap debuted a new logo in an attempt to create a more contemporary presence in the retail market. The new logo was made with Helvetica typeface and did away with the blue box that had become iconic with the brand. There was a public outcry against the new logo, especially in the graphic design community. The company returned to its previous "blue box" logo on October 12, only a week after the new logo's debut.[52][53] Marka Hansen, the executive who oversaw the logo change, resigned February 1, 2011.[54]

Board of directors

Leadership

The current leadership is:[55]

References

  1. ^ a b c [1]
  2. ^ a b c d e f "2010 Form 10-K, The Gap, Inc.". United States Securities and Exchange Commission. http://www.sec.gov/Archives/edgar/data/39911/000119312510068386/d10k.htm. 
  3. ^ Legal name as stated in the company's SEC filings (such as its 2010 10-K report). For non-regulatory purposes the company usually refers to itself as "Gap Inc."
  4. ^ Full Gap Store Count http://www.gapinc.com/public/Investors/inv_re_storecount.shtml
  5. ^ "Gap And Zara Battle For Top Spot - News Markets". Portfolio.com. 2008-09-11. http://www.portfolio.com/news-markets/top-5/2008/08/12/Gap-and-Zara-Battle-for-Top-Spot. Retrieved 2010-08-07. 
  6. ^ "Gap Explores Alternatives, Including Possible Sale: CNBC's Faber". CNBC.com. January 8, 2007. http://www.cnbc.com/id/16527837. 
  7. ^ Paumgarten, Nick. The Merchant. The New Yorker. September 20, 2010.
  8. ^ Gordon, Meryl. Mickey Drexler’s Redemption. The New Yorker. May 21, 2005.
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  17. ^ Mattioli, Dana (October 14, 2011). "Gap to Slash Its Store Count". The Wall Street Journal: p. B1. 
  18. ^ More Information
  19. ^ "Gap Inc. Announces it will close Forth & Towne Store concept" (press release). Gap Inc.. 2007-02-26. http://www.gapinc.com/public/Media/Press_Releases/med_pr_ForthTowne022607.shtml. 
  20. ^ Duxbury, Sarah (2006-10-06). "Piperlime — the shoe fits, Gap wears it". San Francisco Business Times. http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2006/10/09/story3.html. Retrieved 2009-08-21. 
  21. ^ Rosenbloom, Stephanie (2008-09-22). "Gap Acquires Athleta for $150 Million". New York Times. http://www.nytimes.com/2008/09/23/business/23gap.html. Retrieved 2009-08-21. 
  22. ^ Breakdown of net sales by Division from company 8Ks
  23. ^ a b c d e f g h i j k l m Gap Inc. Store Count by Brand
  24. ^ [9]
  25. ^ a b (Croatian) "Take a peek at Zagreb's Gap and Zara Home". tportal.hr. 2010-11-04. http://www.tportal.hr/vijesti/hrvatska/94754/Zavirite-u-zagrebacki-Gap-i-Zaru-home.html. Retrieved 2010-11-05. 
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  27. ^ City Mall directory
  28. ^ Fiba Group - Gap
  29. ^ Al Tayer Group
  30. ^ Fiba Group - Banana Republic
  31. ^ [11]
  32. ^ 1960s: Commerce: Gap | 100 Years of Pop Culture
  33. ^ Morning Edition (2009-09-28). "Gap Inc. Co-Founder Donald Fisher Dies At 81". NPR. http://www.npr.org/templates/story/story.php?storyId=113265289. Retrieved 2010-08-07. 
  34. ^ Gap: Information and Much More from Answers.com
  35. ^ Error - LexisNexis Publisher
  36. ^ . http://stocks.us.reuters.com/stocks/fullDescription.asp?symbol=GPS&WTmodLOC=C5-Profile-1. 
  37. ^ Shields, Amy (2008-01-22). "Gap signs Greek franchise partner | News". Retail Week. http://www.retail-week.com/News/2008/01/gap_signs_greek_franchise_partner.html. Retrieved 2010-08-07. 
  38. ^ Elbit Imaging to franchise Gap, Banana Republic in Israel By Robert Daniel, February 18, 2009
  39. ^ Smart Company - Retail, Accessed, 22 July 2010
  40. ^ "Gap abrirá primera tienda en Chile e inicia desembarco en Sudamérica". La Tercera. 17 November 2010. http://latercera.com/noticia/negocios/2010/11/655-308173-9-gap-abrira-primera-tienda-en-chile-e-inicia-desembarco-en-sudamerica.shtml. Retrieved 2 April 2011. 
  41. ^ gazeta.pl
  42. ^ "Site Profile for gap.com (rank #238) | Compete". Siteanalytics.compete.com. http://siteanalytics.compete.com/gap.com?metric=uv. Retrieved 2010-08-07. 
  43. ^ "The Gap Boots Bootleg!". http://www.mygolfwest.com/features/may_05/gap.htm. 
  44. ^ abc040100.html
  45. ^ [12]
  46. ^ 2007 World’s Most Ethical Companies | Ethisphere Magazine
  47. ^ a b NLCNET
  48. ^ "Gap pulls 'child labour' clothing". BBC News. October 28, 2007. http://news.bbc.co.uk/1/hi/world/south_asia/7066019.stm. Retrieved May 3, 2010. 
  49. ^ Gap accused of child labor. CBS News. 2007-10-29. http://www.webcastr.com/videos/whats-hot/gap-accused-of-child-labor.html. 
  50. ^ "CEO Pressler's out at Gap Inc." MarketWatch
  51. ^ "Gap flagship brand to be run by company veteran" MarketWatch
  52. ^ http://www.huffingtonpost.com/2010/10/06/gap-logo-new_n_753009.html
  53. ^ http://www.huffingtonpost.com/2010/10/12/gap-gets-rid-of-new-logo_n_759131.html
  54. ^ "Head of Gap brand out, outlet executive in line: source". Reuters. February 1, 2011. http://www.reuters.com/article/2011/02/01/us-gap-idUSTRE71052V20110201?feedType=RSS&feedName=businessNews&rpc=23&sp=true. 
  55. ^ About Gap Inc.
  56. ^ Gap Inc. - About Gap Inc. - Executive Leadership Team Biographies

External links

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