Boston, MA 09/08/2014 (wallstreetpr) – According to a few analysts, The Gap Inc. (NYSE:GPS) may feel the margin pressure in the 3Q2014. The main reason behind it as per the information revealed by the experts is nothing but the initiatives taken by GPS to clear its excessive stock.
Below Expectations Sales Affects GPS Stocks:
The Gap Inc. (NYSE:GPS) has been looking forward to clearing its stock for last some time due to less demand. It has not only affected operational efficiency of the company, but also its market performance. As per the reports, it reported 2% reduction in same-store sales for the month of August versus expert’s expectations of 2% gain. The below expectations performance of GPS caused it more than 4% downfall on Friday trading session.
Lindsay Drucker Mann of Goldman Sachs raised question about GPS’s performance in previous quarters and future outlook. She said that The Gap Inc. (NYSE:GPS) might be under pressure to offer positive results after performing below expectations over the past few quarters. Even though Old Navy stores witnessed a slight surge in sales, but it was not enough to avoid 6% fall of GPS.
Why It Missed Market Expectations:
There are quite a few rumors in the market, but as per the inputs shared by Goldman Sachs executive Lindsay Drucker, it was poor sales strategy. According to him, selling inventory at a discount might have put negative implications for all the direct competitors. She gave GPS a price target of $44 and a neutral rating.
The current month i.e. September is the first time when a new team of designers at The Gap Inc. (NYSE:GPS) will assemble first assortment and deliver it to customers. It will be interesting to see as how customers react towards it. Market experts are awaiting customers’ response before giving their inputs abut GPS’s future outlook. The final results will be out by the first week of October.