Gap weighing sale of its China business, claims Bloomberg

Gap Inc is weighing options including a potential sale for its business in China, as the San Francisco-based clothing retailer looks to revamp the operation in the world's second-largest economy.

The company is working with an adviser to study options and has reached out to prospective suitors to gauge interest for the business, said sources, who asked not to be identified as the information is private, according to Bloomberg.

Deliberations are at an early stage and the company could decide to keep the operation, the people said. A representative for Gap declined to comment.

The firm, which owns Banana Republic and its namesake Gap brands, entered China in 2010 and has faced mounting pressure in competitions including Japanese clothing group Fast Retailing co Ltd, which owns Uniqlo, and Spanish fast-fashion brands from Inditex SA.

In Jan, Inditex has plans to close all its physical stores of its three brands Bershka, Pull&Bear and Stradivarius in China.

Apart from its brick-and-mortar stores, Gap's products are also available on Alibaba Group's Tmall online shopping platform. Gap last year pulled its Old Navy brand out of China.

Tang Xiaotang, an analyst of clothing and fashion industry, the oversupply of the apparel sector, fierce competition and declining demand from consumers are main contributors to the retreat of many global clothing giants in the Chinese market.

Gap last week posted fourth-quarter sales that missed estimates as impacts of the pandemic continue to hurt its performance.

It said it's starting a strategic review of options for its business in Europe, including possible closure of company-operated stores in the United Kingdom, France, Ireland and Italy in the second quarter.

The US remains the biggest market for the clothing retailer, while revenue from Asia continues to shrink and accounts for about 5 percent of the total, data compiled by Bloomberg shows.