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Gap Names President for International Unit

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Times Staff Writer

Gap Inc., the nation’s largest specialty apparel retailer, said Monday that it had hired a new president for its international division who will direct the company’s growth outside the United States.

Andrew Rolfe, 37, formerly chairman and chief executive of London-based sandwich chain Pret A Manger, will assume his post at the company’s San Francisco headquarters at the end of January.

He fills a slot left vacant since August 2002, when Ken Pilot left the division seven months after it was created. Although Rolfe’s background is not in apparel retailing, he is skilled at expanding a company into diverse markets, Gap said.

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Opening more Gap stores in overseas locales “represents a clear, longer-term opportunity for our company,” Gap Chief Executive Paul Pressler said in a statement.

International expansion is about the only growth option available to Gap, parent of 4,200 Gap, Old Navy and Banana Republic stores, said Robert Buchanan, an analyst with A.G. Edwards & Sons.

“I think international’s going to be about it -- that and a little bit of growth at Old Navy,” he said. “I think the correct focus near term is improving returns on existing operations.”

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Gap has projected that square footage in the United States would decline 2% this year. It has opened no new stores outside the U.S. in 2003, spokeswoman Jordan Benjamin said.

The company, which opened the first Gap store outside the U.S. in London in 1987, operates 654 of its namesake stores in Western Europe, Japan and Canada. It also runs 29 Old Navy and 16 Banana Republic stores in Canada.

Sales of the Gap brand outside the U.S. increased 27% in the first six months of this fiscal year from those of the first half of 2002, more than any other division.

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Last year the brand’s international sales accounted for nearly 12% of Gap’s $14.5 billion in revenue.

The company does not break out international sales for Old Navy and Banana Republic, but it said those brands were ripe for growth.

“At this point we believe we have significant opportunity to expand internationally,” especially the Old Navy and Banana Republic chains, Benjamin said.

As the brands move into new regions, the company expects to implement strategies designed to suit different countries, she said. Options include opening Gap-brand outlets within existing stores operated by other retailers, joint ventures with other merchants and licensing agreements.

“We’re not looking to cookie-cutter solutions to go into international markets,” Benjamin said.

Old Navy, the company’s chain that touts low-priced apparel, has growth potential in Canada, where taxes are higher and household incomes lower than in the U.S., A.G. Edwards’ Buchanan said.

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“The lower-priced merchandise is very appealing to the Canadian consumer,” given that shoppers in Canada have significantly less buying power than their U.S. counterparts, he said.

Gap has been working to turn its business around after 29 consecutive months of declining sales that ended in October 2002. In August, the company logged its fourth straight quarter of earnings growth.

The company said Rolfe had the skills needed to help the company expand overseas. During his five-year tenure with Pret A Manger, the sandwich chain opened outlets in places as diverse as New York, Hong Kong and Tokyo, the statement said.

Gap’s stock, which has gained 53% in the last year, closed Monday at $18.99, down 9 cents, on the New York Stock Exchange.

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