Stifel Remains Sideliend on Gap, Inc. (GPS) Despite Positive Sales Report
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Stifel reiterated a Hold rating on Gap, Inc. (NYSE: GPS) following the release of the company's June sales results. Comp sales increased 2% in June, well above consensus estimates. The company saw an acceleration of traffic and sales at all divisions heading into Memorial Day. The results were also likely helped by favorable weather. However, despite an improvement in results during June, Stifel anticipates there to be continued challenges in the near term.
Analyst Richard Jaffe commented, "Comp sales increased 2% in June, well above our estimate and consensus. Management indicated that June results were positively impacted by approximately 200 bps due to a shift in the Memorial Day holiday, with Sunday and Monday falling into June this year. The company saw an acceleration of traffic and sales at all divisions heading into Memorial Day, and the strength continued into the month. This was likely aided by more favorable weather. Additionally, the improved sales trend will likely result in management achieving its inventory objective of a low mid-single digit decline at the end of 2Q. Given the depressed valuation, we anticipate shares will trade up on this more favorable news tomorrow."
Shares of Gap, Inc. closed at $21.63 yesterday.
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