GAP Shares Gain On Future Plan Announcements

The Gap Inc. (NYSE:GPS), globally renowned apparel, accessories and personal care products retailer is planning to revive the sales across North America by simplifying its clothing line in all its namesake stores.

The women wear segment of the company saw a huge drop in sales recently. The Gap Inc. became a household name for its high quality casual and jeans wear and the current downward trend in sales follows the company’s deviation from the mainstream to various new collections which do not seem to have gone well with the American customers. The company is planning to revert back to its roots and offer what the customers expect from them said Gap North America’s head, Art Peck who took over the charge recently.

The company is also planning to cut its North American business by closing around 35 percent of their namesake stores in the United States. Meanwhile in the international front, the company wants to expand its business in China and other international markets.  In Greater China alone, Gap wants to increase the number of stores by three fold by the end of this year. It is also having expansion plans for Italy and South America.

Gap Inc. intends to concentrate on a quality of their products and sales and not on the number of stores. So by announcing the intended 35 percent reduction in the number of stores, one can expect the company to be operating around 700 stores by 2013 end.

The sales of its particular line of women wear designed along the lines of formal wear did not do well but the denim line and skinny jean leggings with variety of colors and prints had been doing well in sales.

San Francisco based The Gap Inc. whose shares had declined by 19 percent in this year before today gained about 1.1 percent to $ 18.04 earlier in the morning in the New York Stock Exchange.

On the brighter side for the company, the fall in cotton prices is going to increase its profit margins. The company intends to increase its operating margins to match with those of 2010 when its operating income was almost 13 percent. The company currently runs around 890 namesake stores all over North America and these stores are responsible for around 25 percent of the total sales. According to Peck, the company has to lure younger generation customers and it requires the company to sell clothes which are true to its image.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.