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NEW YORK CITY-With the North American division planning to decrease its square footage by 10% over the next five years, Gap will focus its expansion plans on its online and international divisions, including opening its first unit in China, next year the company said today at its annual investor conference, held here.

Gap will open its first China store next fall and launch online stores in Canada and the United Kingdom next year, said Glenn Murphy, chairman and CEO of Gap Inc.

“We’ve been looking at China for the last two to three years,” Murphy said. “The Europeans [retailers] are well represented and the Japanese are in, but there is no significant American presence in China.”

The China stores will be company owned, but supported by third parties. Meanwhile, Gap will also continue to invest internationally, expanding the number of franchise countries from 19 to 25, including its first units in South America in Chile.

“We definitely want to broaden our European presence,” Murphy said. Gap does not have a presence in three of the top six European apparel markets – Italy, Germany, and Spain – and the company is looking to grow there. Banana Republic, which has opened successfully in London’s Regent Street, also will be expanded by three to four units in the next 18 months.

Globalization also will come to the online division, with an English/French site to be launched in Canada in a separate platform from that of the US online store, said Toby Lenk, president of Gap Direct. A site in the United Kingdom also will be launched, and the company is eyeing Japan.

Domestically, the company has focused on right-sizing its Gap and Old Navy units, through downsizing stores and closing units. Landlords are being approached to renew some leases early in exchange for favorable rents, reported Sabrina Simmons, CFO.

New store designs for Gap and Old Navy also will be implemented. The Gap’s new design, to be in 50 stores by year-end, will continue its rollout. Old Navy’s new look, to be in 55 stores, will be assessed.

“This brand is far from dead,” said Tom Wyatt, president of Old Navy.

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