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Women's sportswear company with '08 sales estimated at $37 million purchased for $150 million

Athleta Inc., a homegrown Petaluma catalog retailer that carved out a niche selling women's sports apparel on the Internet, is being acquired by Gap Inc. for $150 million, the two companies said Monday.

Athleta, which has 250 employees, will stay in Petaluma, said Louise Callagy, spokeswoman for San Francisco-based Gap.

"Everything is going to remain the same," she said. "Athleta will continue to be run out of the Petaluma headquarters."

Athleta will become a brand in Gap's online store, along with Banana Republic, Old Navy and Piperlime, said Glenn Murphy, Gap's CEO.

"Athleta is a great success story with loyal customers that now will become part of the Gap Inc. family of brands," he said.

Founded in 1998, the company markets clothing and footwear designed for swimming, running, hiking, yoga, skiing, tennis, cycling, golf and other sports. About 90 percent is sold under the Athleta brand.

The company, which targets active women between 25 and 55, grew in recent years with women's increased participation in sports, according to Athleta officials.

Athleta rang up an estimated $37 million in sales last year, according to Hoover's Inc., an online business database. The privately held company does not disclose revenues.

"With Gap Inc.'s e-commerce platform and iconic brands, more customers will learn about Athleta," said Joe Teno, Athleta's current CEO. "We continue to provide our existing customers with the great products and service they've come to expect from us."

Teno will become Athleta's president with the acquisition.

Athleta was founded by Scott Kerslake, a cyclist, surfer and former investment banker who saw a market for high-quality exercise apparel specifically designed for women. With $700,000 in seed capital from friends and family, he started the business in Petaluma as an online and catalog retailer.

Athleta designed a line of private-label bodywear and sports apparel and added selected items from manufacturers including Patagonia, Adidas, Marmot and Hind.

Kerslake left Athleta in 2004, and Blue Highways Holdings acquired a majority interest in 2006.

That year, Athleta moved its main distribution facility to Grove City, Ohio, to be closer to customers in the Midwest and East Coast.

Today, Petaluma remains the headquarters, with a 24-hour call center, customer service department, design and product development located there. More than half of Athleta's 250 employees work in Petaluma.

Athleta sells its products on the Internet and in its catalogs. It will circulate 21 million copies of its catalogs this year, according to the company.

Gap saw Athleta as an opportunity to grow in the $31 billion women's active apparel market, Murphy said.

"This strategic acquisition complements our brands perfectly and allows us to leverage our new online platform to expand into this significant retail sector," he said.

In June, Gap launched Universality, an online platform that allows shoppers to browse and buy from all of the company's brands in one shopping cart with a single shipping fee.

Gap had $15.8 billion in sales in 2007 and has 3,100 stores in the United States, Canada, Europe and Asia.

"We're delighted to be selling Athleta to The Gap," said Bruce Willard, manager of majority owner Blue Highways Holdings. "They'll provide the backing of one of the country's pre-eminent clothing brands and bring enormous resources to help Athleta grow from here."

You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.

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