In the past few years, Motley Fool Stock Advisor selection Gap
The company is looking at several ways to restore growth to its brands, but the two that have me the most curious are the launch of its Forth & Towne stores and the debut of Banana Republic in Tokyo and Yokohama, Japan.
The Banana Republic openings in Japan are all in high-profile shopping areas, with plenty of other attractions to draw in the foot traffic. While the rents are likely to be quite high and the area is filled with competition, I think it's an experiment worth the effort. The Banana Republic stores should be able to piggyback on some of the existing infrastructure that supports the Gap stores in Japan.
Based on the information the company has provided, the Forth & Towne effort seems a bit more risky to me. First, this area is loaded with competition from the likes of Chico's FAS
The Forth & Towne openings and Japanese Banana Republic openings are important to watch, because they may indicate the entire company's potential future growth. However, with a total of nine stores announced between the two, it will be quite some time before either expansion has a material effect on Gap's numbers. That's not necessarily a bad thing. It allows the company time to see what is working and change course before getting in over its head. In the meantime, investors still have that solid balance sheet -- and a stock that isn't priced anywhere near perfection -- to fall back on.
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