17. The Gap, Inc. (NYSE:GAP)
Number of Mutual Funds: 17
Number of Hedge Fund Investors in Q2 2024: 39
The Gap, Inc. (NYSE:GAP) is the tumultuous American retailer whose shares have been on quite a ride this year. After they soared by 49% in March, after the firm’s Q4 2023 revenue of $4.3 billion and net income of $185 million beat analyst estimates. This indicated to investors that The Gap, Inc. (NYSE:GAP)’s turnaround plans were moving in the right direction, and in late May and early June, investors further rewarded the firm by sending the stock soaring by another 43%. This came on the back of another beat, with The Gap, Inc. (NYSE:GAP)’s Q1 revenue of $3.39 billion in revenue and $0.41 in EPS beat estimates of $3.29 billion and $0.14. However, since August, the stock is down by 13.37% primarily on the back of a weakening consumer environment that might create hurdles in The Gap, Inc. (NYSE:GAP)’s plans to reshape its brand and forgo promotions in favor of strong brand identity.
The Gap, Inc. (NYSE:GAP)’s management commented on its strategy during the Q2 2024 earnings call:
“We are building stronger brand identities, supported by trend-right products, amplified through more compelling storytelling with an innovative media mix that is translating to greater cultural relevance. We are working to provide our customers with a more engaging omnichannel experience and aim to execute with excellence. Each brand is at a different point in the process and I’m encouraged by the improvements we are driving across the portfolio. I’ll take you through how these elements are showing up at each one of our brands, starting with Old Navy. Over the past year, our operational rigor has enabled us to strengthen Old Navy’s foundation and brand identity. We are winning in key categories with more clarity in pricing and in-store navigation connecting our customers with products they want and compelling storytelling.
As a result, we are driving market share gains and positive comps. Our trend-right product is driving share growth in women’s, which is important as she is the gateway to the family.
Our strategic pursuit to lead in the active category is paying off with sizable market share gains, and we are leading again with dresses as we regain the number one position in the category according to Circana. We also see an opportunity to lean further into denim with an expanded offering, a dynamic in-store and online experience, supported by a new campaign expressing our evolving brand identity work. Old Navy’s marketing is becoming more relevant as evidenced by the impact of the submarine campaign. This successful campaign featured Tracee Ellis Ross and Yara Shahidi, who exuded a carefree Spirit of Summer, dressed in on-brand stylish offerings, it was a great indication of our new and exciting creative for Old Navy.
We are a stronger Old Navy than we were a year ago, and we will continue to operate with this level of rigor as we execute our brand reinvigoration playbook. Now let’s turn to Gap. We are focused on reigniting Gap’s leadership in trend-right products and creative expression through big ideas and culturally relevant messaging, returning to our roots as a pop culture brand. While we’ve achieved great progress with five consecutive quarters of share gains for the brand and seven consecutive quarters of share gains in women’s, we continue to be relentlessly pursuing better. The response to our Linen Moves campaign has been fantastic as we’ve become a destination for linen. Our focus going forward is on repeating these types of creative expressions that leverage our heritage rooted in music and dance and declare a trend statement.”
