Sunday Stock: gap inc.

Author: Isa Serna

Graphics: Tessie Ulman

Current News: Gap Inc.'s brands are each moving in very different directions. The one standout this quarter has been the namesake Gap brand, where comparable sales rose 10%. This was driven by their renewed cultural relevance and strong denim and fleece sales. Banana Republic also grew 3%, while Old Navy fell 4% and Athleta dropped 12%. Overall Gap Inc. reported $3.7 billion in sales, down 2% from last year, and company-wide comparable sales down 1%.

COMPARABLE SALES:

GAP BRAND: +10%

BANANA REPUBLIC: +3%

OLD NAVY: -4%

ATHLETA: -12%

OVERALL STOCK: +12.94%

Gap Inc (NYSE: GAP)
Share Price: $23.48 USD
Market Cap: $8.45B USD

Background: Gap was founded in San Francisco in 1969 by Don and Doris Fisher, after they struggled to find the right size jeans in their local store. Their idea was simple: to create a better retail experience with more sizes and styles in one store. They called it "The Gap", a reference to the "generation gap" between adults and youth during the late 1960s. Since then, Gap Inc. has grown into one of the largest specialty apparel companies in the U.S. and has expanded its portfolio to include Gap, Old Navy, Banana Republic, and Athleta. Today, the company operates 3,500 stores across about 35 countries alongside its e-commerce platforms.

Old Navy is now the biggest question mark. As the company's largest brand, its first comparable sales decline in 12 quarters is a sign of concern. In response, the company appointed longtime retail executive Michael Francis as its new CEO. With a lot of promise surrounding the new leadership, investors reacted positively: Gap shares jumped as much as 24% on Friday before closing up nearly 13% at $23.48. Despite the overall mixed sales results, Gap beat profit expectations and raised its full-year earnings outlook. The question now is whether Gap Inc CEO Richard Dickson can take the momentum behind Gap's comeback and bring it to Old Navy and Athleta.