Leading apparel retail chain, Gap Inc. (GPS), posted strong November comparable store sales (comps) driven by sustained strength in its North American brands portfolio. Going forward, the company expects to compete rigorously across as its brands and channels as the peak holiday season approaches.
November (four-week period ended November 24, 2012) comps at Gap rose 3% versus a 5% decline in the comparable prior-year period. Moreover, net sales in November summed to $1.52 billion, up 3.4% compared with the prior-year period sales of $1.47 billion.
Comps at Gap North America increased 5% against a 2% decline recorded in the prior-year period. Banana Republic North America’s same-store sales were up 3% versus flat comps in November last year. Results at its Old Navy North America segment reflected a 1% rise in comps compared with a 7% fall in the prior-year period. Comps at the International business rose 3% for the month compared with a 9% decline recorded in the prior-year period.
Year-to-date through November 24, 2012, the company’s net sales climbed 6% to $12.44 billion compared with $11.73 billion in the prior-year period. Improvements in net sales were primarily driven by 4% growth in the company’s comps.
Concurrently, two of the company’s competitors – Ross Stores Inc. (ROST) and Nordstrom Inc. (JWN) – reported same-store sales for the month of November. Ross Stores recorded 2% growth in November comps, while comps at Nordstrom dipped 1.1%.
Gap is scheduled to release its December sales results on January 3, 2012.
We believe the company’s relentless focus on turnaround strategies for improvising the top line are paying off, which is reflected in its solid comps and sales performance in recent months. The company has now posted positive comps for five consecutive months (July through November 2012).
Further, Gap’s long-term strategic moves, along with disciplined cost management measures will not only furnish it with financial flexibility, but will also help reduce operating expenses. Moreover, Gap’s globally recognized brands complement one another, enabling it to leverage its position in the sector.
Currently, Gap’s shares maintain a Zacks #2 Rank, which translates into a short-term Buy rating. Our long-term recommendation on the stock remains Outperform.
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