Morningstar Rating

Stock Research and Analysis

by Bridget Weishaar

Bulls Say

Investments in technology and a responsive supply chain should help Gap narrow the margin spread between its brands and that of H&M and Inditex.
Athleta is in the sweet spot of the activewear trend and could become a fourth power brand for the company, giving management a strong new growth driver.
The company has done the difficult task of culling almost 6 million square feet off its North America specialty fleet and can now enjoy growth through higher margin franchises, outlets, and international markets. Read more 

Bears Say

The quick expansion of fast fashion retailers in the U.S. could mean more competition in basics and market share losses for Gap and Old Navy.
The brand has lost some of its cache since its heyday in the 1990s, making it more exposed to volatility as demand is now tied more closely to product hits than brand.
Pricing power on basics could diminish with a flood of low cost options, making cost efficiencies necessary to maintain or grow margins. Read more 

Management

We are giving Gap a Standard stewardship rating. Former CEO Glenn Murphy had been replaced by internal employee Art Peck in February 2014. Although we were sorry to see Murphy go, we think Peck was a sound choice for CEO. Peck has the experience and   Read more 

Profile

Gap is a global apparel and accessories retailer for men, women, and children operating under the brands of Gap, Banana Republic, Old Navy, Athleta, and Intermix. Distribution   Read more 

What to Make of the Market Mayhem 
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