Shares of Gap on track for biggest gain since 2008
By Noel Randewich
SAN FRANCISCO (Reuters) - Shares of Gap Inc had their biggest jump in eight years on Friday and many of its rivals also rose after the apparel retailer posted September sales that were not as bad as expected and kindled hopes of a potential recovery in the sector.
Gap's report provided respite to shares of mall retailers that have been crippled in recent years by low-price fast-fashion competitors, a trend where consumers are spending their extra income on apparel, and the growing dominance of Amazon.com.
Gap was up 14.9 percent at $26.16, on track for its largest one-day increase since November 2008. Abercrombie & Fitch, Bebe Stores, Ralph Lauren and Chico's FAS all gained 2 percent or more on Friday after Gap's report late the day before.
Gap said comparable sales in September fell 3 percent compared to a 1 percent drop in September last year. It blamed the drop on disruptions caused by a fire at a distribution center that it reported at the end of August. Analysts on average had expected a 2.9 percent dip, according to Thomson Reuters data.
Some analysts focused on a 4 percent increase in comparable sales at Gap's Old Navy segment, even as comparable sales at its Banana Republic unit fell 9 percent and Gap Global declined 10 percent.
"We see a potential scenario of the segment producing high single digit comps this winter, aiding the company will turn the corner on leveraging rent and occupancy," wrote Deutsche analyst Paul Trussell, who upgraded his rating on GAP to "hold" from "sell".
Six analysts recommend selling Gap, while 23 have "hold" ratings and just three recommend buying, according to Thomson Reuters data.
Gap's rally on Friday left its stock up 5 percent in 2016 but still down 10 percent over the past 12 months. The S&P 500 has gained 7 percent over the past year. Continued...