Gap (GPS) Outpaces March Comps Expectations on Early Easter; Stifel Affirms 'Buy' Rating

Stifel affirms Gap, Inc. (NYSE: GPS) at Buy with a price target of $48 following March sales results, which were reported after markets closed Thursday.

Analyst Richard Jaffe noted that comps rose 2 percent last month, which was slightly above the analyst's estimate due to an earlier Easter holiday.

Jaffe offered the following commentary: Stores had adequate units of appealing product which drove sales at high margin. At Gap, the shortfall in sales was due to lack of product appeal in women's apparel. In addition, the ongoing weak product acceptance is having a negative impact on Gap traffic, compounding the problem in the near term. Gap management sought to reduce the inventories of the Gap brand wherever possible, although having only modest effect. Merchandise delivery delays at the Banana division kept management from setting the spring fashion as effectively as planned. In addition the assortment, primarily consisting of black and white, lacked the excitement and appeal of color. Net, while results were below plan, the jury is still out, as BR is not particularly influenced by the Easter shift.

Looking ahead to April, the Easter shift will have the most significant impact on Old Navy, likely moderated somewhat by the strong appeal of its offerings. Gap sales will likely continue be under pressure until more appealing merchandise flows help to slow the sales decline.

For an analyst ratings summary and ratings history on Gap, Inc. click here. For more ratings news on Gap, Inc. click here.

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