GAP Buying Intermix, Closing 20% of US Namesake Stores

According to an article published in today’s Wall Street Journal, major retailer Gap, (parent to Old Navy, Banana Republic and Piperlime) is making its foray into the luxury arena – a market segment some would argue the retailer needs to reach in order to stay competitive today, especially amid booming global retailers like H&M and Zara. The casual clothing retailer’s entre into luxury will be made through its acquisition of women’s fashion boutique Intermix Inc., a deal being made for $130 million according to the article.

The acquisition is the first in five years for Gap (it bought active wear retailer Athleta in 2008 for $150 million), which had good stock performance last year. Intermix, a store mostly popular in metropolitan areas like New York City, doesn’t produce its own clothes and has about 30 stores in the U.S. and Canada. However, as the WSJ article points out, its Intermix’s relationships with designers (like Herve Leger, Yves Saint Laurent and Rag & Bone) that Gap is interested in.

Gap plans to double Intermix’s store count, then look for opportunities to expand the chain overseas, while planning to close 20% of North American Gap stores and testing new brands to try and expand overseas. The company’s sales from Athleta and Piperlime (an e-commerce site it started in 2006, which sells brands like Trina Turk), increased to $301 million in 2011 from $187 million two years earlier. WSJ reports that Intermix has sales of around $130 million a year.