Gap moves into luxury market with Intermix buy
(Reuters) - Gap Inc (GPS.N), which owns clothing retailers Banana Republic and Old Navy as well as its namesake brand, expanded into the luxury market with its purchase of women's apparel retailer Intermix Holdco Inc for $130 million.
Gap also reported a 5 percent jump in same-store sales for December. Analysts had expected a rise of 3.5 percent, according to Thomson Reuters data.
Gap, whose shares have risen 69 percent in the last year, has seen its comparable-store sales improve as new campaigns and trendier offerings helped it compete better with more fashionable rivals, including Inditex SA's (ITX.MC) Zara chain.
Jefferies & Co analyst Randal Konik said Intermix will help Gap return to a "fashion leadership position".
Privately held Intermix sells clothes and accessories from renowned design houses such as Yigal Azrouel, Yves Saint Laurent, Brian Atwood and Jimmy Choo. It has 32 boutique stores in North America and also operates a retail website.
"We see the benefit of cross pollination of the high fashion chain and Gap's existing brands (particularly Gap brand) as a significant positive of the deal," Jefferies analyst Konik wrote in a note.
Upmarket menswear maker Ermenegildo Zegna and U.S. cosmetics group Estee Lauder (EL.N) said in November they expect the luxury goods sector to regain vigor in 2013, after the economic slowdown in Europe and China affected luxury sales in 2012.
News of the acquisition was first reported by the Wall Street Journal.
The deal marks the latest by Gap following its 2008 purchase of women's active apparel retailer Athleta.
Gap, which also operates the online fashion boutique Piperlime, said Intermix would continue to operate under the leadership of its co-founder Khajak Keledjian in the role of chief creative officer.
The company also said it approved a $1 billion share repurchase program after an earlier $1 billion program ended in the fourth quarter.
Gap's shares were flat at $31.37 in morning trading on the New York Stock Exchange on Thursday.
(Reporting by Maria Ajit Thomas and Avik Das in Bangalore; Editing by Maju Samuel)
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