Gap To Sell Athleta

Gap Inc. (NYSE:GPS) announced Tuesday plans to sell its Athleta brand in Canada, rival Lululemon’s (NASDAQ:LULU) home turf.

It marks the women’s athletic apparel brand’s first expansion outside of the United States.

Gap said Athleta will launch online in the Canadian market later this summer, followed by the opening of company-owned retail stores in North York, Ontario, and West Vancouver, British Columbia, this fall.

The move is part of Gap’s overall strategy to grow Athleta to the point that it’s bringing in $2 billion in net sales annually by 2023. Athleta surpassed the $1-billion mark last year, with its sales up 16% from 2019 levels. Gap’s total sales for 2020 amounted to $13.8 billion.

The Athleta brand — like peers Lululemon and Nike (NYSE:NKE) — has been a pandemic beneficiary, as more women look for comfortable clothing such as leggings, stretchy pants, tank tops and soft pullover sweaters to wear at home during the health crisis.

Gap is on track to open between 20 and 30 Athleta stores across North America each year, adding to the more than 200 locations it has today. It also said it will consider different wholesale partnerships and franchise-operated stores as it looks for growth globally. It already has a franchise model and wholesale business for Athleta in the U.K.

In Gap’s fourth quarter, Athleta’s same-store sales were up 26%, marking the biggest increase of its four brands, including Old Navy. Athleta is also the least promotional of Gap’s brands, which helps drive profits higher.

GPS shares receded 66 cents, or 2%, to $31.75.