Gap Considering China Business Sale, Reviewing Europe Closures

The Gap, Inc. is considering selling its China business - and maybe even some further afield.

The clothing retailer is in talks with an adviser to determine options for selling its China business, people with knowledge of the matter told Bloomberg News.

Gap has gone as far as reaching out to potential buyers but deliberations are still in early stages, the sources, who declined to be identified, said.

Whie it is likely the sale in China will proceed, the sources said Gap may still choose to stick it out.

However, it's not just Chinese customers that could lose Gap as the company has also started reviewing options for its Europe business.

The company has yet to comment on its reported plans for its China operations, but the company earlier confirmed that it is considering the possibility of shutting some stores in France, the UK, Italy and Ireland by the second quarter.

Gap's plans for its Europe and China businesses emerged after the company posted fourth quarter sales that missed analyst estimates.

Despite this the company projected sales would rebound this year.

The company's Athleta and Old Navy brands have helped raise hopes with continuous growth. But the Banana Republic brand saw a 22% fall in sales.

Gap is looking to open between 30 to 40 Old Navy stores and between 20 to 30 Athleta locations.

The company said in its earnings report last week that online sales ballooned by 49%.

Physical store sales were hit hard by the pandemic, and while digital sales helped, some analysts believe the increase in online sales last year isn't enough.

Gap, like other big clothing retailers, relied heavily on bricks-and-mortar operations before online selling was popular. Industry experts said the company would need to explore e-commerce settings deeper to further offset the store sales dip.

Gap Inc. will shut down 100 Banana Republic and Gap stores around the world this year.