Gap will sell its Gap Greater China (GGC) business to Shanghai-based ecommerce solutions provider Baozun in a $40 million all-cash transaction. The sale is the latest move by the retailer to scale down during a difficult year that included cutting 500 corporate positions in September 2022, including roles at main offices in Asia.
Baozun recently established Baozun Brand Management (BBM), through which it will use its technology portfolio to cultivate brands. The company will operate Gap’s in-market site and stores under a franchise agreement that will allow the ecommerce company to apply its data management capabilities and digital business approach to create an omnichannel experience designed to resonate with local consumers.
The sale of the GGC business to Baozun should be completed within the first half of 2023, and it will continue to operate under the Gap Inc. name until regulatory approvals are granted and closing conditions are completed.
“This acquisition accelerates our evolution into a technology-driven, omnichannel commerce player,” said Vincent Qiu, Chairman and CEO of Baozun in a statement. “Technology is at the center of our strategy, and it is our competitive advantage. With Gap’s brand equity and significant size in Greater China, BBM will start at a higher point to bridge the digital commerce/brick-and-mortar divide at scale and do what few have done in retail.”
“To the teams that support our China business, I look forward to seeing all that Baozun can unlock for GGC as they take on our stores, assets and most importantly our incredible people,” said Mark Breitbard, President and CEO of Gap Brand in a Nov. 7 letter to employees. “I want to thank you for your support as we make this transition and express my appreciation of the China leadership team for leading the work.”
Gap has been struggling in a difficult retail environment. The company’s former CEO, Sonia Syngal, left in July 2022 following a challenging Q1 2022 that saw the company’s net sales fall by 13% to $3.5 billion. By Q2 2022, Gap reported an 8% year over year drop in net sales to $3.86 billion. Gap Inc. will report its Q3 2022 results on Nov. 17, 2022.