Fashion retailer Gap Inc. (GPS) is acquiring privately held women's fashion boutique Intermix Inc. for $130 million as it plans to enter the all-important luxury market, the Wall Street Journal reported Wednesday.
Intermix only has around 30 stores in the U.S. and Canada, and doesn't produce its own clothes. But, Gap expects to benefit from the chain's relationships with designers, including Herve Leger, Yves Saint Laurent and Rag & Bone, the report noted. Intermix has sales of around $130 million a year.
As per the report, Intermix's private-equity owner, Goode Partners LLC, put its 40% stake in the retailer up for sale in October, following which the company's investment bankers started negotiations with Gap.
Art Peck, president in charge of new brands at Gap, reportedly said that Gap plans to double Intermix's store count following the acquisition, then look for opportunities to expand the chain overseas.
Gap, parent of the Gap, Old Navy and Banana Republic brands, is testing out new brands and trying to expand overseas, mainly into markets in Europe and Asia, even though it is closing 20% of its North American namesake stores.
Intermix founder and CEO Khajak Keledjian, who will remain at the company as chief creative officer, stated, "We are the incubator with emerging brands, and we can help them out with collaborations."
The latest deal is Gap's first since it paid $150 million in 2008 for women's active apparel retailer Athleta. In 2006, the company started Piperlime, an e-commerce site that sells other brands such as Elizabeth and James and Trina Turk.
In November, the company once again raised its full year earnings outlook after reporting a 60 percent jump in third quarter profit helped by higher sales and improved margins.
Gap closed Wednesday's trading session at $31.37, up $0.33 or 1.06 percent. In the after hours trading, shares dropped 0.70 percent.
by RTT Staff Writer
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