Leading apparel retail chain,
), posted strong October and third quarter comparable store sales
(comps) driven by sustained strength in its North American brands
portfolio. Going forward, the company targets to maintain its
business performance by improving its product offerings for
GAP INC (GPS): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis
ROSS STORES (ROST): Free Stock Analysis
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October (four-week period ended October 27, 2012) comps at Gap
rose 4% versus a 6% decline in the comparable prior-year period.
Moreover, net sales in October summed to $1.22 billion, up 7.0%
compared with the prior-year period sales of $1.14 billion.
Comps at Gap North America increased 6% against a 5% decline
recorded in the prior-year period. Banana Republic North
America's same-store sales were up 5% versus a 1% increase in
October last year. Results at its Old Navy North America segment
reflected a 5% rise in comps compared with a 9% fall in the
prior-year period. On the flip side, comps at the International
business declined 2% for the month, but were comparatively better
than the 7% decline recorded in the prior-year period.
Simultaneously, the company reported an improvement in third
quarter comps and sales numbers. Comps for the quarter escalated
6% compared with a 5% decline in third quarter last year.
Improvement in the quarter's comps came from a 7% elevation in
comps at Gap North America, a 6% comps growth at Banana Republic
North America and a 9% comps augmentation at Old Navy North
America; offset by a 3% comps decline in the International
segment. Net sales came in at $3.86 billion, an increase of 8%
from $3.59 billion reported in the year-ago quarter.
Year-to-date through October 27, 2012, the company's net sales
climbed 6% to $10.93 billion compared with $10.27 billion in the
prior-year period. Improvements in net sales were primarily
driven by 5% growth in the company's comps.
Concurrently, two of the company's competitors -
Ross Stores Inc.
) - reported enhanced same-store sales for the month of October.
Nordstrom recorded 9.8% growth in October comps, while comps at
Ross increased 4%.
Gap is scheduled to release its third quarter financial results
after the market closes on November 15, 2012.
The company projects third quarter earnings per share in the 61
cents - 63 cents range, versus 38 cents earned in the year-ago
quarter. The Zacks Consensus Estimate for the quarter stands at
the higher end of the company's guidance range.
We believe the company's relentless focus on turnaround
strategies for improvising the top line are paying off, which is
reflected in its solid comps and sales performance in recent
months. The company has now posted positive comps for four
consecutive months (July, August, September and October).
Further, Gap's long-term strategic moves, along with disciplined
cost management measures will not only provide it financial
flexibility, but will also help 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
translates into a short-term Buy rating. Our long-term
recommendation on the stock remains Outperform.