Gap Heads To $40 With Solid August Sales

Specialty retailer Gap Inc. (NYSE:GPS) reported solid August 2012 sales with increases of 9% in both its net sales and comparable store sales compared to the same period last year. ^[1] Talking in terms of brands, Old Navy was the major contributor to Gap’s growth in August with a comp increase of 12% against a 4% decline last year. We believe the August results confirm the strong positioning of Gap in the current teen apparel market. Gap competes with other specialty retailers like Aeropostale (NYSE:ARO), American Eagle (NYSE:AEO), Abercrombie & Fitch (NYSE:ANF) and Urban Outfitters (NYSE:URBN).

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August results confirm Gap’s strong positioning in teen apparel market

With solid net sales and comparable sales growths in August, Gap has ended its back-to-school season in style. Clubbing together the results in July and August, considered the two core months for back-to-school shopping, Gap has significantly outperformed peers such as Aeropostale and Abercrombie & Fitch in the teen apparel space.

Old Navy major resurgent brand this back-to-school season. With comp growths of 12% in both July and August this year, the brand was the highest contributor to Gap’s back-to-school sales in 2012. We believe the impressive results in the season reflects Gap’s focus on improving its product mix and a tight control on its inventories. By hiring Jill Stanton as Creative Adviser, Old Navy certainly has improved Gap’s product offerings and has catered well to the consumer expectations. And with a tight control on inventory, the company has ensured that its merchandise remains up to date with the current fashion trends.

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1. Gap reports solid August 2012 sales, Source: Gap’s IR [↩]