Gap Inc. (NYSE:GPS), fresh from a profitable quarter, announced Thursday that it will expand its presence in markets like China and Japan, and enter India next year. The company’s sales in Asia accounted for only nine percent of its global net sales of $3.98 billion in the second quarter.
For the quarter ended Aug. 2, the company reported a profit of $332 million, or 75 cents a share, up from $303 million, or 64 cents a share, a year earlier, and said, in a statement, that it will enter India through 40 franchise-operated stores. The San Francisco-based company has reportedly been looking to reduce its dependence on U.S. markets, which generated 77 percent of its net sales in the second quarter.
“India is an emerging, vibrant market and an important next step in our global expansion strategy," said Steve Sunnucks, president of Gap's worldwide operations.
Ismail Seyis, vice president of Gap Global Franchise, said in the statement: “More than half of India’s population is under 25 and they are actively embracing fashion in today’s retail environment,” adding that its first stores in India will open in Mumbai and Delhi, in partnership with a subsidiary of Indian textile manufacturer Arvind Limited.
For the second quarter, Gap reported that sales at its stores around the world were flat, against a 5 percent increase in the same quarter last year. The performance also reflected flat sales at Banana Republic and a growth of 4 percent at Old Navy -- two of its key subsidiaries. For the fiscal year ending February 2015, the company raised its full-year profit forecast to $3 a share to reflect gains on asset sales.
The company also said that it will continue to expand its store base in China and Japan, and announced plans to open 110 stores across mainland China and 40 stores in Japan by the end of the current fiscal year.