This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Gap Plunges: What Wall Street's Saying

NEW YORK (TheStreet) -- Gap (GPS - Get Report) shares slid 4% on Friday following the apparel retailer's disappointing same-store sales in August.

Gap said after the market closed on Thursday that last month's net sales across all of its brands were flat compared to sales of $1.23 billion last year.

The San Francisco-based retail company said that comparable sales declined 2% in August, compared to consensus expectations of a 1.6% gain. Its flagship brand saw a 6% decline in same-store sales compared to a 2% gain in the same month last year. Banana Republic's comps also declined 2% compared to a 2% gain last year, while its Old Navy brand reported a 2% comp gain, but was lower than the 3.4% expected.

Gap specifically noted in a press release that its August sales performance "will likely put pressure on the brand's gross margins in September 2014."

Read More: Why Michael Kors (KORS) Stock Is Down Today

Shares were falling 4.4% to $44.52 at last check. Here's what analysts are saying on Friday about Gap.

Laura Champine, Canaccord Genuity (Buy: $50 PT)

GPS reported a 2% SSS decline on top of +2% in August, below our +2.8% estimate and consensus of +2%. Old Navy global turned in its fifth consecutive month of SSS gains, but it wasn't enough to offset weakness at Gap global. SSS declined 6% on top of +2% at the namesake brand, which has inflated inventory levels heading into the more important month of September (historically accounts for around 37% of total Q3 sales vs. August at 31%). We are now modeling for 50bps of gross margin pressure in Q3, versus our prior flat forecast, as the Gap brand clears out the excess inventory. We expect GPS's omni-channel and supply-chain initiatives will revive gross margin from F2015-F2018, driving average annual yr./yr. increases of 27bps over that span. We continue to like the long-term opportunity here, especially with shares trading at 13x our C2015 EPS estimate and 7x C2015E EV/EBITDA based on the after-hours price of $44.

Read More: Costco Same-Store Sales: What Wall Street's Saying

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
GPS $41.43 -1.43%
AAPL $126.41 -1.66%
FB $81.21 0.39%
GOOG $575.33 0.34%
TSLA $200.63 -0.89%


DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs