QUOTE AND NEWS
Bloomberg  Nov 4  Comment 
Investors should buy bullish options on Gap Inc. and Macy’s Inc. because the retailers may advance after reporting greater-than-estimated sales tomorrow, Goldman Sachs Group Inc. said.
Market Intelligence Center  Nov 3  Comment 
Gap (NYSE: GPS) closed yesterday at $21.80. So far the stock has hit a 52-week low of $9.41 and 52-week high of $23.36. Gap stock has been showing support around 20.97 and resistance in the 22.33 range. Technical indicators for the stock are...
PR Newswire  Oct 29  Comment 
NEW YORK, Oct. 29 /PRNewswire/ -- Launching in stores from 2nd November 2009, Stella McCartney creates a collection for boys and girls from 0-6 months to 12 years. The collection features her signature touches - a soft color palette, familiar
PR Newswire  Oct 27  Comment 
CHICAGO, Oct. 27 /PRNewswire/ -- Seven Summits Research issues PriceWatch Alerts for GE, SNDK, AEM, GPS, and ACI. Seven Summits Strategic Investments' PriceWatch Alerts are available at http://www.iotogo.com/s/102709A (Note: You may have to copy this
Stock Blog Hub  Oct 26  Comment 
Gap Inc. (GPS) continues to see bullish Zacks Consensus Estimates. The current full year forecast of $1.40 per share is up 5 cents over the past month. For 2010, analysts polled by Zacks are calling for earnings of $1.53 per share, versus last...
PR Newswire  Oct 23  Comment 
We are advised by Gap that journalists and other readers should disregard the news release, Stella McCartney Debut Children's Collection in Collaboration With GapKids and babyGap Holiday 2009, issued 23-Oct-2009 over PR Newswire. A new release will
Market Intelligence Center  Oct 16  Comment 
Gap (GPS) was upgraded today by analysts at Caris and the stock is now at $22.74, down $0.05 (-0.22%) on volume of 2,830,650 shares traded. Caris upgraded the stock today to Buy from Above Average and set a $27 price target on the stock. Over the...
StreetInsider.com  Oct 16  Comment 
newratings.com  Oct 16  Comment 
TheStreet.com  Oct 15  Comment 
Gap is returning to television advertising and opening its first store in China next year.
MarketWatch  Oct 15  Comment 
Retail stocks fell Thursday as the number of people filing for state unemployment benefits fell for the fifth time in the past six weeks. The S&P Retail Index dropped 0.7% to 395. Gap Inc. shares were down 0.4%. The largest U.S. clothing chain,...
MarketWatch  Oct 15  Comment 
Gap Inc. will reduce its square footage by about 10% over the next five years as it consolidates stores and relocates to smaller-sized locations, Chief Financial Officer Sabrina Simmons told analysts and investors in a meeting in New York...
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GPS AT A GLANCE
 
 
 
 
 
 
 
 
     Table of Contents      
Intro and Overview
     Introduction
     Business Overview
Trends and Forces
      Key Trends and Forces
Competition

The Gap, Inc. is a clothing retailer based in the United States, operating 3,149 retail stores[1] under three distinct apparel brand names – "Gap", "Old Navy", and "Banana Republic." More than 2,800 of these stores are in the U.S., and Gap also has over 300 store locations overseas in the UK, Canada, France, and Japan.[2] In fiscal 2008 Gap's net sales fell 7.85% to $14.5 billion[1] as same store sales decreased 12% on the year.[1] Gap's sales peaked at $16.6 billion in 2004 and have been decreasing annually since then.[1]

The retail industry has exhibited mixed results in the face of a major downturn in the U.S. economy spurred by the subprime lending crisis in the summer of 2007 and record high oil prices. Overall consumer spending has declined, particularly on non-necessity fashionable apparel and accessories, which are the types of goods Gap's stores sell. As a result of the poor outlook for the U.S. economy the company increased its plans for store closings from 100 to 115, to match its planned store openings of 115, yielding a net change of zero locations for the year.[3] In addition, the company has decreased compensation for its executive board and pared down the board's size. The company's ethos of providing stylish clothes at affordable prices has been made more difficult due to the proliferation of fast fashion brands such as Zara, which specialize in trendier, more fashion-forward clothing which is more attractive to young consumers than Gap's affordable basics.

Business Overview

Gap Inc. is one of the largest companies in the apparel retail market with 3,149 store locations[1] and over $14 billion in annual sales.[1] Despite its size and position as one of the largest apparel retailers in the U.S., Gap has been struggling since 2004, reporting negative same store sales growth in 2005-2008 (of -5%, -7%, -4% and -12% in each consecutive year respectively) as net sales have fallen every year since they peaked at $16.2 billion in 2004 to $14.5 billion in 2008.[1] Despite falling sales, Gap has been able to maintain relatively healthy gross and operating margin figures, 36.1% and 8.3% in 2008, by managing inventory levels and staying away from merchandise markdowns and promotional selling activities that inflate operating expenses.

Net sales in the first quarter of fiscal 2009 (ended 5/2/09) were $3.1 billion, down from 2008's $3.4 billion. In addition, online sales increased by 13% and comparable store sales decreased by 8%.[4] Despite the sales decreases in its first quarter, the company expects earnings per share for its second quarter to be $0.30 to $0.32 per share greater than analyst estimates of $0.28 per share.[5]

Net sales for the 2nd quarter of fiscal 2009 (ended 08/25/09) were $3.25 billion, down from 200's $3.5 billion.[6] Same store sales decreased 8% from Q1 and online sales increased 17% from Q2 2008.[6] Net earnings for the quarter were $0.33/share ($228 million total), which beat company estimates from Q1 2009.[6]

FY2008 Sales by Segment
FY2008 Sales by Segment


The Gap Brands

Gap has three distinct brands, each with its own target market and unique challenges. Banana Republic offers higher-priced clothing, Old Navy offers lower-priced clothing, and Gap falls in between. In 2008, Old Navy accounted for 39% of sales, with Gap responsible for 44% and Banana Republic accounting for about 18%.[7] The company is divided into two segments: the retail segment (93% of FY08 Revenues) concerns all brick-and-mortar stores throughout the world. The direct segment (7% of FY08 Revenues) covers the company website and consolidates all sales of Old Navy, Gap, Banana Republic, Athleta and Piperlime sales conducted online.

Gap Stores

The Gap brand's main focus is casual attire targeted at consumers between the ages of 18 and 25. Additionally, The Gap has stores utilizing the Gap brand which target narrower segments of the retail apparel industry, including GapKids, babyGap, and gapbody.

The Gap has the largest footprint of the three brands both in the US and internationally, operating 1,193[8] stores in North America and 286 stores internationally as of January 2009.[8] Net sales for the Gap brand decreased by 5% during 2008 and same store sales at the Gap decreased 8% in 2008.[7]

Old Navy

Targeting a value-conscious consumer, Old Navy offers lower-priced basics. Its primary consumer is either a “trade-up” customer who normally shops at a similarly priced apparel retailer like Wal-Mart, Target, or Kohl’s, or a “trade-down” customer looking for value basics and fashion. Like The Gap, Old Navy stores sell children's and infant clothing in addition to adult-sized clothing.

The Old Navy brand operated 1,065 stores in North America as of January 2009.[8] Old Navy's net sales fell 2.4% in 2008[7] while the brand's same store sales fell 4.[7] Old Navy faltered in the last few years because management attempted to sophisticate the merchandise at Old Navy, which hurt profitability and strayed from the target customer's demands. The brand is now re-focusing on delivering apparel and accessories for the whole family at compelling values.

Banana Republic

Deemed The Gap Inc.’s "affordable luxury" brand, Banana Republic was acquired in 1983. Its target market is the 25-35 age group. Banana Republic specializes in higher-end clothing and basics, carrying suits, personal care, and intimates.

Of Gap's three store-based brands, Banana Republic is the smallest in terms of number of locations, with only 603 total stores, 573 in North America, 27 in Asia and 3 in Europe.[8] Although sales decreased by only 3% in 2008[7] (the lowest out of all Gap brands), Banana Republic's same store sales decreased by 10%[7], second only to Old Navy.

Other Brands

Piperlime, a growing concept launched in late 2006, is Gap's attempt to use its experiences with the online retail operations of its three brands in order to enter a business that none of its three stores focus on: footwear. Piperlime is an online-only operation that sells designer shoes. Piperlime is largely separate from the rest of Gap, with its own team and deadlines. A key challenge for the company will be developing this venture in a profitable way--a particularly challenging goal in the super-competitive market for designer shoes. Piperlime has seen positive growth in 2008, helping to fuel 14% growth in Gap's online sales during the year.[7]. In 2008, the company acquired Athleta, a line of athletic gear. The line has been integrated into the company website, where all five brands (Gap, Old Navy, Banana Republic, Piperlime and Athleta) can be accessed at once.

Intro and Overview | Trends and Forces | Competition


References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 GPS 2008 Annual Report pg. 16  
  2. | Gap (GPS) Press Release, First Quarter Earnings Release 2008
  3. | Gap (GPS) Press Release, First Quarter Earnings Release 2008
  4. GPS Q1F09 Report
  5. The Gap, Inc. Issues Q2 2009 EPS Guidance Above Analysts' Estimates
  6. 6.0 6.1 6.2 Trading Markets, "Gap Reports 2Q Earnings," 08/24/09
  7. 7.0 7.1 7.2 7.3 7.4 7.5 7.6 GPS 2008 Annual Report pg. 20  
  8. 8.0 8.1 8.2 8.3 GPS 2008 Annual Report pg. 21  
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