GPS - Embedded Expectations Analysis - 2021 06 25
The Gap, Inc. (GPS:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about margin guidance, volume and customer growth, and their marketing and brand investmentsSpecifically, management may lack confidence in their ability to sustain transaction volume and customer growth at Old Navy, efficiently manage costs, and expand product margins. Moreover, they may be concerned about supply chain headwinds, the impact of pandemic-related store closures, and the progress of their Gap brand improvement initiatives. Management may also lack confidence in their ability to capitalize on brand growth opportunities, pursue demand-generating investments, and maintain their digital presence, especially in North America. Furthermore, they may be concerned about the sustainability of Old Navy's dominance in the kids and baby space, and they may lack confidence in their ability to establish a market presence in Europe, particularly with Gap. Additionally, management may be concerned about the potential of Old Navy's intimates launch, Yeezy Gap, and their full store rationalization program
The Gap is an apparel retail company. The company provides apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, and Hill City brands. The company has stores in the U.S., Canada, the U.K., France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico, and has franchise agreements with unaffiliated franchisees to operate Old Navy, Gap, and Banana Republic stores throughout Asia, Europe, Latin America, the Middle East, and Africa. Under these agreements, third parties operate stores that sell apparel and related products under the company's brand names.
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