Gap: growth stock at a value price
Gap is displaying all the classic signs of a retailer in trouble: dwindling sales and not enough exposure to e-commerce. After becoming a staple of the high street in the 1990’s, the company now appears to be falling out of fashion. But management has a big plan to turn things around which could benefit investors buying in at the current multi-year lows. Read on to find out why we’re excited by the strategy.
US fashion chain Gap Inc (US: GPS) is still a fixture in shopping centres and high streets around the UK. But shares in the firm have fallen by nearly 60% over the last five years, as it struggles with retail sector headwinds and company-specific problems. Management now plan to split the company in two to try and revitalise the group's portfolio of brands, which include Banana Republic and ‘athleisure’ brand Athleta. The faster-growing Old Navy discount brand will be spun out into a separate business, while the remaining Gap brands will be grouped together and (hopefully) revived. With Gap shareholders set…