• by Sarah Mahoney  @mahoney_sarah, October 13, 2011

Faced with a relentlessly underperforming flagship, Gap Inc. unveiled a new series of initiatives to investors, including stepped-up Chinese expansion and new marketing plans here at home.

While sales in the North American division of the Gap are especially problematic, declining in 15 out of the last 18 months, all units struggled in September, with comparable-store sales dropping 4% at Gap North America, 13% in its international division, and slipping 1% at both Banana Republic and Old Navy.

Among its plans for tackling its problems here in the U.S., the company says the Gap brand is “making immediate adjustments across the business and testing provocative ideas, especially around product, store experience and marketing.” Additionally, it says that customers will see “more color, emotion and clearer product points of view,” while remaining focused on “the Gap brand aesthetic of casual, American, optimistic style.”

Old Navy is shrinking its new-store model and will launch new marketing next month that reflects “the brand’s sense of fun, fashion, family and value.” At Banana Republic, buoyed by the success of its recent Mad Men mini-collection, management is focusing on finding more partnerships.

The San Francisco-based company says it will step up its efforts to build sales outside the U.S., nearly tripling the number of Gap stores in greater China from roughly 15 at the end of this year to about 45 by the end of 2012. It will open its first Old Navy outside the U.S., in Japan, within 18 months. And the first Gap flagship in Hong Kong is set to open in a matter of weeks, as is its first Banana Republic in Paris later this year.

The company says its new stores are performing well in China and Italy, and that its franchise business has seen revenues gain 48% in the first half of fiscal 2011.

It’s also concentrating on online initiatives, and expects the division to reach $1.5 billion in revenue by the end of this year, and $2 billion in revenue, with operating income of $500 million, by the end of fiscal 2014. It’s in the midst of expanding its “ship-from-store” pilot, including testing it within Old Navy next year.

Among its smaller brands, it says it expects to expand Athleta to 10 stores by the end of fiscal year 2011, and 50 by the end of fiscal 2013. Additionally, it plans to test a store concept for its Piperlime website, and is testing men’s clothing, as well.