Ahead Of The Bell: BMO Lowers Gap Rating

NEW YORK (AP) — A pickup in promotions at its namesake stores and concerns about a new advertising campaign and inventory levels prompted an analyst to lower his rating on Gap Inc. on Monday.

John Morris of BMO Capital Markets said in a client note that the apparel retailer seems to be getting more promotional at its Gap stores, as evidenced by the recent extension of a 25 percent off sale that was initially supposed to last for one day. Morris said the apparent increase in promotions suggests lost sales at Gap stores.

The analyst is also concerned that the San Francisco company has high expectations for its new advertising campaign and a deep inventory commitment ahead of the holidays, which may not pay off as quickly as needed.

Morris cut Gap to "Market Perform" from "Outperform" and reduced his price target for the company to $23 from $26.