Gap beats estimates and regains analysts’ trust
Monday, 08 October 2012
Gap Inc’s September same-stores sales rose 6 percent, beating Wall Street predictions and regaining analysts’ confidence. Analysts polled by Thomson Reuters expected an increase of 5.3 percent. Revenue at its stores open at least a
year rose 6 percent on a global basis. On average, Wall Street analysts expected a smaller 5.3 percent gain. Last year, GPS’ September same-store sales were down 4 percent from the year-before period.Total
net sales for the five weeks ended Sept. 29 rose 8 percent to 1.45 billion dollars. A 10 percent increase at its Old Navy unit has proved to be key for the clothing chain to beat analysts' expectations.After such a positive result, Gap Inc. shares rose 1 percent, also lifted after Caris & Co. raised the stock rating to ‘buy’ from ‘above average’.
Meanwhile, analysts at Zacks said: “We believe the company's relentless focus on turnaround strategies for improvising top line are paying off, which is reflected in its solid comps and sales performance in recent months. The company has posted positive comps for the last three consecutive months (July, August and September), while comps were flat in June and up in February, March and May. This reflects the significant progress the company has made despite the poor comps results in every month of fiscal 2011, with the exception of April and June.”
They also highlighted how “Further, Gap's long-term strategic moves, along with disciplined cost management measures will not only provide financial flexibility to the company, but also help it to reduce operating expenses. Moreover, Gap's globally recognized brands complement one another, enabling it to leverage its position in the sector.
Currently, Gap's shares maintain a Zacks #2 Rank, which means a short-term ‘buy’ rating and a long-term recommendation on the stock that remains 'outperform'.
Finally, analysts at Piper Jaffray firm reiterated their ‘overweight’ rating on the stock and lifted its price target to 42 dollars. Piper Jaffray also raised its earnings estimates for the company, noting its stores seem to be carrying some solid sales momentum.
