NEW YORK (TheStreet) -- Shares of The Gap (GPS) were gaining 1.3% to $38.70 in after-hours trading on Monday after the apparel retailer announced a series of strategic actions it will take in an attempt to better position its brand.
Gap said it will close 175 Gap brand stores in North America "over the next few years" with 140 closures happening in the current fiscal year. After the closures the company will have about 800 Gap brand stores in North America.
The company also said it will cut about 250 jobs from the Gab brand's headquarters in fiscal 2015.
Gap said it also plans to "deliver more consistent and compelling product collections and engage customers across all channels."
"Returning Gap brand to growth has been the top priority since my appointment four months ago - and Jeff and his team bring a sense of urgency to this work," CEO Art Peck said in a statement. "Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers."
TheStreet Ratings team rates GAP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAP INC (GPS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, GAP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 41.84% is the gross profit margin for GAP INC which we consider to be strong. Regardless of GPS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.53% trails the industry average.
- GAP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GAP INC increased its bottom line by earning $2.88 versus $2.75 in the prior year. For the next year, the market is expecting a contraction of 3.6% in earnings ($2.78 versus $2.88).
- You can view the full analysis from the report here: GPS Ratings Report