Market Overview

The Gap Is Accelerating Store Closures; Here's Why Some See That As A Positive

The Gap Is Accelerating Store Closures; Here's Why Some See That As A Positive

Gap Inc (NYSE: GPS) reported Thursday its third quarter results, which consisted of a top and bottom-line beat, an upward revision to its full year EPS guidance and an update on store closures.

The Analyst

Deutsche Bank's Paul Trussell maintains a Hold rating on Gap's stock with a price target raised from $26 to $27.

The Thesis

The retailer delivered another "solid" earnings report, driven by a better than expected comparable store sales gain and gross product margin gains, Trussell said in a note. All three of the company's core brands showed an improvement from the prior quarter and beat industry traffic trends. The Athletica brand also showed signs of continued momentum, which helped boost the company's "other" segment sales growth to 16.2 percent year-over-year versus 15.5 percent in the second quarter. In addition, overall AUR (average unit revenue) rose for the fourth consecutive quarter.

The company updated investors on its store closure plans at Gap and Banana Republic and will now do so at an accelerated pace, the analyst said. This is a positive as it demonstrates management's commitment to improving overall productivity by reducing its exposure to "traffic challenges" even though the GAp's traffic exceeded the industry average in the quarter.

However, the company will face difficult comp and margin compares next year, which implies for the time being it's too early to become constructive on the stock, the analyst said.

Price Action

Shares of Gap gained more than 8 percent to $29.78 Friday morning.

Related Links:

10 Stocks To Watch For November 17, 2017

Things To Like, Things To Watch At The Gap

Image credit: Mike Mozart, Flickr

Latest Ratings for GPS

Sep 2019MaintainsMarket Perform
Aug 2019MaintainsUnderweight
Aug 2019MaintainsNeutral

View More Analyst Ratings for GPS
View the Latest Analyst Ratings

Posted-In: Athletica Banana Republic Deutsche BankAnalyst Color Earnings News Price Target Analyst Ratings Best of Benzinga


Related Articles (GPS)

View Comments and Join the Discussion!

Latest Ratings

HDDZ BankDowngrades
COGWolfe ResearchUpgrades
MLHRSidoti & Co.Maintains45.0
ICFISidoti & Co.Maintains99.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Chipotle Reaches Highest Level Since Q3 Report

Bill Gates: Tech Titan To Famed Investor