International News - Gap ponders acquisition options

Gap is poised for possible retail or brand acquisitions, as it looks for growth opportunities on the back of strong first-quarter results.

Gap chief executive Paul Pressler said the store group, which owns the Old Navy and Banana Republic chains, was actively exploring 'multiple' growth opportunities now that its turnaround is under way.

This could involve creating or buying brands, or launching into markets such as the discount sector, he said.

'It would be an opportunity to enable accelerated growth, acquire real estate faster or find a small brand and help it grow,' Pressler told analysts.

He added that the inter-nal development of products was also a priority, such as Gap swimwear. The retailer is also launching plus sizes for Old Navy at 55 stores in July.

'We firmly believe there is a significant opportunity at each brand for organic growth,' he said.

Last week, Gap posted a 54 per cent surge in net earnings for the first quarter to US$312 million (£172.6 million), compared with US$202 million (£111.8 million) for the same period last year.

Sales for the quarter, which ended on May 1, were up 9 per cent to US$3.7 billion (£2.05 billion) from US$3.4 billion (£1.88 billion) last year.

Gap like-for-like sales in the US were up 5 per cent, compared with 12 per cent for the same quarter last year.

Merrill Lynch analysts noted that: 'Confidence is building as the company is talking more aggressively and openly about growth.'