Banana Republic Stores Can Drive Growth for Gap
With signs of economic recovery and improving consumer demand, Gap (NYSE:GPS) is likely to benefit from growing Banana Republic store count as well as revenues. We estimate Banana Republic stores account for around 18% of Gap’s stock.
Over the last week, Trefis members have created forecasts for two key drivers of Gap’s stock : (1) Number of Banana Republic Stores and (2) Banana Republic Revenue per Square Foot. The member forecasts suggest that both the drivers will roughly trend in-line with estimates of the in-house team of analysts at Trefis.
Gap competes with Aeropostale (NYSE:ARO), American Eagle Outfitters (NYSE:AEO), Abercrombie & Fitch (NYSE:ANF), Urban Outfitters (NASDAQ:URBN), and J.Crew Group (NYSE:JCG). We currently have a Trefis price estimate of $34 for Gap’s stock, nearly double the current market price of around $17.
Gap’s stock is quite sensitive to (1) Number of Banana Republic Stores and (2) Banana Republic Revenue per Square Foot. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
1. Number of Banana Republic Stores
The average of Trefis member forecasts for Number of Banana Republic Stores is in-line with Trefis forecasts. The baseline Trefis estimate projects an increase from 612 stores in 2010 to 774 stores by the end of the Trefis forecast period. In the past, Number of Banana Republic Stores has increased from 462 in 2004 to 606 in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Gap’s stock to Number of Banana Republic Stores.
Our complete analysis for Number of Banana Republic Stores is here.
2. Banana Republic Revenue per Square Foot
The average of Trefis member forecasts for Banana Republic Revenue per Square Foot indicate an increase from around $455 in 2010 to $571.50 by the end of the Trefis forecast period, roughly in-line with the baseline Trefis estimate of an increase from $452 in 2010 to $560 by the end of the Trefis forecast period. The member estimates imply a small upside to the Trefis price estimate for Gap’s stock. In the past, Banana Republic Revenue per Square Foot has decreased from $566 in 2004 to $443 in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Gap’s stock to Banana Republic Revenue per Square Foot.