The Gap's share price has had a bad year with shares down by over 50%. The last CEO was fired in July after the company's abysmal first quarter earnings report. In the most recent Q2 earnings report, sales were down, comparable sales were down, online sales were down, and merchandise margins were down. They ended their partnership because it wasn't Producing well. High inflation, rising logistics costs, and waning consumer discretionary spending are some of the factors that caused Gap to pull their full-year outlook. Most of the retail industry has been affected by the consumer pull back, as evidenced by warnings from Target, Walmart, and others. Airfreight costs took 130 basis points off its gross margin. If this is truly the dark point before the dawn, the Gap may be setting itself up as a turn around play. The bar for expectations has been set by the company. With shares falling towards lows, investors have to wonder if the worst is behind them.
MarketBeat.com - MarketBeat You can put a bag over it.
The Gap released its second-quarter fiscal 2022 results on August 25th. Excluding non-recurring items, the Company reported earnings-per-share of $0.08, beating analysts' estimates by a tenth. Revenues fell but still beat analyst estimates for $3.82 billion. The sale of Old Navy fell to $2 billion. The Gap's sales fell by 10%. Banana Republic sales increased 9% to $539 million. Despite pulling its full-year outlook, the company is still cautiously optimistic as it saw an improvement in sales trends in July. The CFO of Gap stated that they have seen an improvement in sales trends in July and August due to the impact of high gas prices on the low income consumer. In the second quarter, comparable sales were down 10%, a sequential improvement from the negative 14% comp reported in the first quarter, which was negatively impacted by the lapping ofStimulus.
The charts are saying what they are saying.
The rifle charts on the weekly and daily time frames give a precise view of the landscape. The weekly rifle chart peaked. The weekly market structure low and market structure high were triggered by shares. The weekly breakdown is forming with resistance at $9.32 crossing the 15-period MA. The daily rifle chart breakdown has a falling 5-period MA resistance and a falling 15- period MA resistance. The lower bollinger bands are $8.40 a day. There is a mini inverse pup falling towards the 20 band. The $7.79 fib, $7.49 fib, $7.08 fib, $6.60, and the $6. 24 fib are attractive levels.
There is a turnaround strategy.
The Gap, Banana Republic, and Athleta are some of the popular private label brands. Old Navy is the second largest brand in the market. CFO O'Connell laid out a plan to turn around the company, which included reducing inventory through the second half of the year, reexamining its marketing and technology investments, and fortifying the balance sheet. The company plans to open 30 to 40 Athleta stores, 20 to 30 Old Navy stores and close 50 Gap and Banana Republic stores.
The bar should be set low.
Any good news should be magnified by the company's low expectations. Depending on the caliber of the appointment, the announcement of a new CEO should increase share prices. There is a chance that it could spin off its Old Navy brand into a separate company. Retail stocks tend to rise in the weeks leading up to the holiday shopping season.
GAP is one of the largest publicly traded companies founded by entrepreneurs.
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