Image Source : China Visual

BEIJING, November 9 (TMTPOST) — American fast fashion brand Gap has agreed to sell its Greater China business to Baozun, an e-commerce retailer in China, for up to $50 million, according to Baozun's announcement on Tuesday.

The parties have signed a share purchase agreement for a total transaction amount of up to $50 million, subject to final adjustments to the agreement. The acquisition is expected to be finished in the first half of 2023, pending meeting customary closing requirements and regulatory approvals.

In addition, Baozun signed a series of commercial agreements with Gap to obtain an exclusive license to manufacture, promote and sell Gap products in China, as well as the right to design products in China. The relevant commercial agreements will stay effective for an initial period of 10 years, renewable twice for five years each time.

As the largest professional apparel company in the U.S., Gap achieved sales of $16.7 billion in fiscal 2021. Its brands include Old Navy, Gap, Banana Republic, etc. Gap entered the Chinese market in 2010, with over 200 stores and nearly 30 million members in peak time. However, in the past two years, some international fast fashion apparel brands have been withdrawing from the Chinese market. Gap's Old Navy brand also exited the Chinese market in 2020, The company closed a large number of stores.

The Gap Greater China operating entities acquired by Baozun eCommerce are Gap Shanghai and Gap Taiwan, which are responsible for the operation of mainland China and Taiwan respectively. Gap Shanghai had net losses of up to 456 million yuan ($62.87 million) and 256 million yuan ($35.28 million) in 2020 and 2021. Its net assets as of the end of July 2022 were approximately 300 million yuan ($41.35 million).

Founded in 1969, the revenue of Gap has barely grown in the last decade, with net sales of $16.1 billion in fiscal 2013 and $16.7 billion in fiscal 2021, a compound annual growth rate of only 0.5%.

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