Morningstar Rating

Stock Research and Analysis

by Bridget Weishaar

Bulls Say

Investments in technology and the 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 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 franchises, outlets, and international markets. Read more 

Bears Say

The quick expansion of fast fashion retailers in the U.S. could mean more competition 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 than brand.
Pricing power on basics could diminish with a flood of low cost options, making cost efficiencies necessary to maintain margins. Read more 

Management

We are giving Gap a Standard stewardship rating. Glenn Murphy is expected to depart from his CEO position in February 2015 and to be replaced by internal employee Art Peck. Although we're sorry to see Murphy go, we think Peck is a sound choice for CEO.  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, Piperlime, Athleta, and Intermix.  Read more 

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