Is it over for the Gap?
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This holiday season the Gap and every other retailer in America are going to war with Wal-Mart (WMT) and Target (TGT). Target has just as fashionable clothing as the Gap and Old Navy, carrying Mossimo, Levi, and Cherokee brands which to the consumer is better priced and just as 'cool' as Gap brands. CEO Paul Pressler said last week that the Gap is "maniacally focused on our turnaround in the short run", how can they accomplish that this holiday season when the pressure is on from Target and Wal-Mart?

The Stockmasters are predicting the answer will come when the Gap hosts its tenth consecutive quarter of negative same store sales growth next March.

It's not just the pressure from Wal-Mart that is causing the Gap to fail. Retailers have been stealing away Gap's market presence for the past few years. The Gap has to get its spending under control, get back to basics, and find a new way to connect with the consumer. The Gap is still a force to be reckoned with, they had $2.7 billion in revenue last quarter, but without sales growth, Wall Street could care less. So Gap, enough with the celebrity endorsements, spend your money on your business, and let Claudia Schiffer buy her own S-Class Mercedes.

Here is another ad example - how much did this cost, and did Lenny Kravitz actually help sell anything? Let the music artists make their own videos; just let it go. No one will remember the ad by next year anyway.

However if the Gap misses another quarter, investors may never forget it and then it's all over.

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Article written by: Phil McCallister
Article posted on: November 21st, 2006