Today, Gap announced it was acquiring Intermix, a fashion boutique that retails $1,500 Herve Leger dresses and is frequented by stars like Kim Kardashian. The $130 million transaction raised some eyebrows.
Gap is America’s largest retailer, and sells basics at affordable prices. Intermix is a small specialty chain that stocks items that the average American could never afford.
Both sides, however, benefit from the acquisition, said Brian Sozzi, chief equities analyst at NBG Productions.
“Gap is trying to gain intelligence on how it could bring pricier, trendier merchandise in a more affordable way to its other divisions,” he said.
In addition to its namesake brand, Gap owns family clothing store Old Navy, young professional work wear retailer Banana Republic, fitness chain Athleta and affordable-but-trendy boutique Piperlime. The Intermix acquisition gives Gap’s portfolio a whole new dimension.
And why would Intermix partner with Gap? Because the retailer has incredible resources that will help the boutique expand its online and global presence, according to Dhani Mau at Fashionista.com.
Gap also confirmed that it would be beefing up Intermix’s e-commerce operations.
“”We have an omnichannel strategy that we’re putting in place where we bring the Web and the store experience together,” a Gap executive told WWD.
While the partnership between Gap and Intermix might seem strange on first glance, there’s a good chance it will be a successful one, Sozzi said.
“Gap has a good track record with acquisitions,” Sozzi said. “They were able to turn Athleta into a viable competitor to Lululemon.”
Intermix sent us a photo from inside its Meatpacking District store:
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.