GPS - Embedded Expectations Analysis - 2021 09 30
The Gap, Inc. (GPS:USA) currently trades near Uniform asset values, with a 1.0x Uniform P/B. At these levels, the market is pricing in expectations for profitability to remain muted, and management may have concerns about their Gap brand strength, the BODEQUALITY launch, and their online initiatives.Specifically, management may have concerns about the progress of their Gap brand restoration, and they may be overstating the potential of the BODEQUALITY launch and Drapr acquisition. Additionally, they may lack confidence in their ability to capitalize on mood-boosting clothes and teen logo hoodie demand, enhance their site design for higher-end products, and maintain earnings per share (EPS) growth. Furthermore, management may lack confidence in their ability to execute their partner-to-amplify strategy and navigate through current market volatility. Finally, they may be exaggerating the potential of their Simone Biles partnership, the progress of their cloud migration, and the impact of their transportation speed investments.
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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