GAP company information

It was the year of 1969 when man has taken its first step toward the moon and â€Å"Doris and Don Fisher opened the first Gap store in US in San Francisco. † The fast change in style between teenagers and adult lead to formation of company name called â€Å"GAP†. From Justa single store In 1969. our story Doris and Don Fisher opened the first Gap store in 1969. The reason was simple. Don couldnt find a pair of jeans that fit. They never expected to transform retail. But they did. Guided by humility, compassion and a strong desire to win, the Fishers grew their company thoughtfully. ustomers responded.Today, Gap Inc. Is a leading International specialty retailer with six brands – Gap, Banana Republic, Old Navy, Piperlime, Athleta and INTERMIX – more than 3,500 stores and more than 137. 000 employees. We're growing globally, and Just within the last few years, we opened our first stores In china and Italy. we're expanding online shopping to customers, too. T oday, customers in about 90 countries can buy our products. While many things have changed since 1969, the principles on which we were founded have stayed the same: creativity, delivering results, doing what's right and lways thinking of our customers first.Key Facts Founded: 1969, with a single store in San Francisco The original brand that brought American casual style to the world. Founded In 1909 In San Francisco, cap offers Iconic, yet modern clothing and accessories for adults, kids and babies. Gap gives customers the freedom to express their individual sense of style. Brand Includes Gap, GapKids, babyGap, GapMaternity and Gap30dy. Franchise stores: More than 350 stores in locations across Asia, Australia, Eastern Europe, Latin America, the Middle East and Africa Brands: cap Intermix Old Navvy PiperlimeAthleta Headquarters World HQ: San Francisco Bay Area Product Design: New York City, San Francisco, Los Angeles, London Store Management, distribution and product manufacturing: Worldwide. Stores Total: More than 3,500 stores worldwide Fun Facts The average cost of a pair of Jeans at Gap in 1969? About $7! Gap's 1988 Individuals of Style campaign was the first time the company specifically hired celebrities as models. In 2004, Banana Republic was among the first sponsors of the Emmy-nominated sleeper hit â€Å"Project Runway. † Gap has about 10 miles of storefront windows around the world. Old Navvy was named after a bar in Paris! Retired New York Times fashion editor Carrie Donovan was tapped to be the â€Å"Old Navvy Lady† in 1997 after Joking in one of her columns that she'd be great for TV spots for the brand. After a wildly successful pilot, Gap Factory Outlet was founded and opened its first store in August 1994. Glenn Murphy is our fourth CEO since our founding in 1969. (Bob Fisher served as interim CEO in 2007 before Glenn was hired. ) Celebrity stylist Rachel Zoe can be found on Piperlime. com, where she shares her picks on her favor ite fashions from the site. ? Athleta, which has served women thletes since 1998, opened its first full-sized store in 2011. How They Do Business: From the start, Gap Inc. ‘s story wasn't going to be limited to Just selling Jeans. Doris and Don Fisher made certain that integrity would become a hallmark of their business. As they continue to expand their presence internationally, They're more aware than ever how their decisions affect the communities in which they do business. And their philosophy is simple: They seek to make a positive, lasting impact on the people and in the places where they operate.They listen to their customers around the world, and share their expectations. For hey, that means looking deeper into their supply chain to ensure that they take a responsible path throughout the product lifecycle, from the source to their stores. Financial and Strategic Analysis Company Overview The Gap, Inc. (Gap) is a specialty apparel company. The product line of the company consists of casual apparel care products, accessories and fashion apparel. The company distributes its products through its retail stores, internet and catalog stores. The company is also operates wholesale and franchisee businesses.Gap operates company owned stores in the US, Canada, France, Ireland, Italy, Japan and the I-JK. Financial Performance: The company reported revenues of (U. S. Dollars) USD14,549. OO million during the fiscal year ended January2012, a decrease of 0. 78% from 2011. The operatingprofit of the company was USD 1,438. 00 million duringthe fiscal year 2012, a decrease of 26. 93% from 2011. The net profit of the company was USD 833. 00 millionduring the fiscal year 2012, a decrease of 30. 81% from2011 Share Data THE GAP, INC. , Share Data pnce (USD) as on 01-NOV-2012 35. 5 EPS (USD) Book value per share (USD) 1. 56 5. 68 Shares Outstanding (in million) 533 Performance Chart SWOT Analysts THE GAP, INC. , SWOT Analysts Strengths Weaknesses Strong Liquidity Posit ion Strong Product Portfolio and Brand Recognition Wide Geographic Presence Product Recall Dependency on Third Party Manufacturers Decreasing Comparable Store Sales Opportunities Threats Growing Apparel Market Increasing Online Presence Expansion into New Markets Competitive Environment Changing Consumer Behavior Decreasing Shopping Trips SWOT Analysis – Overview The Gap, Inc. Gap) is a specialty retailer of apparel, footwear and accessories. The I-JK, France, Ireland and Japan. The company also has online and catalog stores. The company's broad product portfolio and brand recognition and wide geographic resence provide strong foundation for its future growth . However, intense competition and changing consumer behavior are the major areas of concern for the company. THE GAP, INC. – strengths Strength – Strong Liquidity Position The company's liquidity position strengthen significantly during the fiscal year 2010.The company recorded current ratio of 2. 19 at th e fiscal year ended 2010, as compared to 1. 86 in 2009. Gap had significant increase in its cash and short term investments during the fiscal year 2010. It recorded cash and short term investments of USD 2573. 00 million in 2010, as compared to USD 1715. 0 million during the fiscal year ended 2009. Moreover the company reported a net change in cash of USD 633. 00 million in 2010, as compared to a negative net change in cash of USD 9 million at the fiscal year ended 2009.This was principally due to increase in cash inflow from operating activities. The company' cash flow from operating activities increased 36. 54% to USD 1928. 00 during the fiscal year ended 2010. Increasing cash and cash equivalent represents the companys ability to fund its business opportunities, working capital needs, meeting short term obligations and other capital requirements in the future. Strength – Strong Product Portfolio and Brand Recognition The company's strong product portfolio and brand recogni tion ensures financial stability through a diversified customer base.Gap through its retail and online stores engaged in providing a wide range of apparel and accessories for men, women and children. The company markets its products under the well known brands, namely Gap, Old Navvy, GapKids, babyGap, GapBody, Banana Republic, and Piperlime. Under the Gap brand, the company provides denim, khakis and T-shirts, fashion apparel, accessories and personal care products. The company also provides a wide collection f apparel and accessories under the brand names GapKids and babyGap.Under the Old Navvy brand, the company offers apparel, shoes and accessories for both children and adults. The company also provides casual and tailored apparel, shoes and accessories for men and women under its Banana Republic brand. In addition, the company also offers its products through its websites. The company, through its multiple store banners, caters to a wide range of customers across the world. Stre ngth – Wide Geographic Presence The company's wide geographic presence insulates it from the risk of operating in a single economy. Gap operates 3,082 stores across North America, Europe and Asia.In products across several geographies. The company's franchised stores are located in Bahrain, Indonesia, Kuwait, Malaysia, the Philippines, the Oman, Qatar, The Kingdom of Saudi Arabia, Singapore, South Korea, Turkey, the United Arab Emirates, Greece, Romania, Bulgaria, Cyprus and Croatia. The company also operates its online stores through www. gap. com, www. bananarepublic. com, www. oldnavy. com, and www. piperlime. com websites. The company's global presence enables it to build its brand image and maintain its strong position in the market.THE GAP, INC. – Weaknesses Weakness – Product Recall The company's various product recalls not only generate substantial negative publicity about its products and business, but also prevent commercialization of other future prod uct candidates. During April 2010, the company recalled its babyGap Marrakesh and Gap Outlet baby one-piece swimsuits . This recall was mainly due to presence of a halter straps that were manufactured too short causing the plastic ring located at the center of the swimsuit to press against the child's throat and obstruct the airway.This poses a strangulation hazard to the child. Weakness – Dependency on Third Party Manufacturers The company is highly dependent on the vendors outside the US, which may adversely affect its ability to meet any urgent requirements. The company purchases private label merchandise from approximately 650 vendors and non-private label merchandise from approximately 350 vendors having facilities in approximately 60 countries. During the fiscal year 2010, approximately 98% of the merchandise was produced outside the US.These outside vendors require to comply with certain vendor conducts and environmental, labor, health, and safety standards in domestic and international markets. Any noncompliance with the standards might delay the delivery of the goods and significantly affect the company's reputation. Thus, the company's high dependence on third party manufacturers may have an adverse affect on its business operations. Weakness – Decreasing Comparable Store Sales The comparable store sales have been decreasing over the past few years, which is adversely affecting the growth of the company.The stores segment accounts for more than 90% of the company's total revenue. During the fiscal year ended 2010, the company generated USD 13,079 million as compared to USD 13,496 million in the iscal year ending 2009, a decrease of 3. 18%. Over the past three years, the comparable store sales figures have been declining as demonstrated by a decrease of 9. 17% in the fiscal year 2009 and a decrease of 2. 19 % in the fiscal year 2008. As a result, Gap recorded a negative CAGR of 2. 97% during the period 2006-2010.The decrease has been pri marily due to a decline in net sales in all the brands due to the weakening retail environment and a shift of consumers from department stores to supermarkets and discount stores. THE GAP, INC. – opportunities The performance of the industry is forecasted to accelerate, with an anticipated CAGR rate of 2. 6% during 2006-2011. According to research, the US apparel retailing industry is expected to drive to a value of USD336. 7 billion by the end of 2011. Gap's stores and direct segments provide branded apparel, footwear and accessories for men, women and children through their retail and online stores.The company offering state of the art products and solutions through their wide distribution channel is likely to utilize opportunity of the growing apparel industry and thereby boost their top line growth. Opportunity – Increasing Online Presence With the rising trend of e-commerce business, there is huge potential for the ompany to increase its profitability through the direct-to-customer segment. In the fiscal year ending 2009, the direct-to-customer segment accounted for 7. 87% of the total revenue of the company and it increased by 8. 4% as compared to the sales at the end of the fiscal year 2010. The company can increase the contribution of this segment to the revenue by increasing its online presence. According to Forrester, online sales are expected to increase 13% to about USD 176. 9 billion in 2010. The growth is forecast to be 10%, 9% and 8% for 2011, 2012 and 2013, respectively. Moreover according to a report published by U. S. Census Bureau the non-store retail sales for the 10 month period from January to October 2010 increased by 12. 7% from the same period in 2009.Such web-based store concept provides consumers the convenience of shopping from home, doing away with the time consuming Journey and saving on the transportation cost. Thus, web sales are expected to register substantial growth in the coming years as e-commerce continues to capture market share from physical stores. The company stands to benefit from the growth trend of e-retail, which is supported by rising internet penetration and increasing familiarity o online shopping. Opportunity – Expansion into New Markets The company has taken several initiatives to enter new geographies in recent financial years.During November 2010, the company opened its firsh Gap store in Italy. This new store is located on Corso Vittorio Emanuele in Milan's premier shopping district. It also entered into an agreement with Armin Systems Limited to bring Gap stores in Thailand. Moreover during November 2010, the company announced to open its first store in Latin America during the fiscal year 2011. The store will be located in Santiago, Chile. The company also had taken initiatives to launch its Gap, Banana Republic and Old Navvy online brands in Canada, and Gap and Banana Republic online in the UK and nine other European countries.The company also has renewed inter est for a possible foray into India's specialty clothing market through possible venture with Reliance Retail. The company's several initiatives to enter new markets may provide significant exposure to more diversified customer base and strengthen its brand image. THE GAP, INC. – Threats Gap operates in a highly competitive specialty apparel retail industry. It faces intense ompetition from local, national, and global department stores, specialty and discount store chains, independent retail stores, and online businesses, which are dealing with similar products.The company also faces significant competition from the local players in European, Japanese, and Canadian markets. The company's franchisees also faces competition in the respective markets. Increasing global competition in the apparel retailing market may significantly affect the company's market share in the future financial years. Threat – Changing Consumer Behavior Owing to recession, consumers in the US are left with lesser disposable incomes. It is showing in their purchase attitude Consumers tend to reduce their discretionary shopping.According to a consumer survey conducted in the US by Harris Interactive, more than half of adults (54%) say they would reduce discretionary spending during an economic recession and the majority (63%) of adults said they would not make a purchase if there was no deal attached. It clearly states that during an economic recession, consumers would cut budgets, yet will continue to shop when discounts are available. The scenario is a threat to specialty retailers like the company, which ell discretionary products. They will see a decreased footfalls and reduced revenues.In order to attract customers, these retailers will have to spend more on coupons and discounts, which will reduce their margins. Threat – Decreasing Shopping Trips The business of Gap may significantly affected due to decreasing shopping trips of consumers in the US. The US operati ons contributed to 82. 1% of the total revenue of the company in the fiscal year ending 2010. According to a study by Nielsen, outlet shopping trips in the US has shown an average monthly decline of 4% from July 2008 o February 2010.The company has already been recording a decline in comparable store sales over the past few years, which accounts for Change Factors: In the beginning Gap was sell only Levi's products where they have to depend on that particular brand by and large. Later on when they realized depending too much on a particular product may harm the business in the future, they have changed there course of depending on a single particular product . Gradually they have came up with there own product name and different supplier in order to reduce risks. In 1983 Gap purchased Banana Republic