British clothing retailer Next has finalised a joint venture with Gap Inc to run the US company’s business in the UK and Ireland. The franchise partnership will see Next own 51% of the business, with Gap owning the remaining 49%.
The deal will mean that Next will sell Gap clothing through its new online hosting site for other brands, Next Total Platform, as well as through Gap-branded Shop-in-Shops.
Lord Simon Wolfson, chief executive of Next, said: “Next is delighted at the prospect of its Total Platform supporting Gap on the next stage of development of its world-renowned brand in the UK and Ireland.”
Next’s share price was up 2.10% in mid-afternoon trade as at 14.53 BST on the London Stock Exchange following the news.
Operational changes at Gap
Mark Breitbard, CEO and president of Gap Global, commented, “Gap is partnering with NEXT, one of the UK’s leading online clothing retailers, to amplify our omnichannel business and meet our customers in UK and Ireland where they are shopping now.”
After a review of its European operations, Gap announced in June that it would close its 81 physical stores in the UK and Ireland and run an online-only business, in a blow to the beleaguered British high street.
The company said it is in negotiations with Hermione People & Brands – the retail arm of Michel Ohayon’s property development company Financière Immobilière Bordelaise (FIB) – to take over its French operations. The transaction would involve 21 Gap-branded stores and at least 358 jobs in France, according to a statement from FIB Group.
Gap is also “in discussions” with an unnamed partner for the acquisition of its Italian stores, although it had already cemented a franchising deal with Italian retailer OVS back in March, according to WWD.
Strong sales for Next
Next reported full price sales in the eleven weeks to 17 July 2021 were up 18.6% on two years ago, and raised its guidance for full-year profit before tax by £30m ($41.4m) to £750m. Half-year results are due on September 29.
It also said it would repay £29m of business rates relief to the government.
The UK’s Office for National Statistics today announced that retail sales fell by 0.9% in August, despite expectations of a rise due to the lifting of lockdown restrictions.
The proportion of retail sales made online in the UK reached 27.7% in August, up from 19.7% before the pandemic.