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Why Foray Into India Makes Much Sense For The Gap Inc. (NYSE:GPS)

Boston, MA 08/22/2014 (wallstreetpr) – The Gap Inc. (NYSE:GPS) announced its 2Q results in which the company performed better than it did in the like quarter in the prior year. In fact, it also surpassed consensus estimates on both earnings and revenue. The global specialty apparel company realized a net profit of $332 million or $0.75 in the latest quarter, better than $303 million or $0.64 in the same period last year. On an adjusted basis, earnings were $0.70 a share for the latest quarter, which was still better than $0.69 that analysts expected. On the revenue side, Gap generated $3.98 billion, up 3% from last year and better than $3.96 billion that analysts estimated for the quarter.

Earnings forecast

While the 2Q results were a source of excitement, the real source of good news was the improved earnings forecast that the company issued for the full-year. It expects full-year earnings in the range of $2.95 – $3 a share, better than earnings range of $2.90 – $2.95 that was originally forecast for the year. On the average, analysts polled by Thomson Reuters expect earnings of $2.95 a share for the full-year.

Emerging market plot

The Gap Inc. (NYSE:GPS) also unleashed more good news such as plans to boost revenue with opening of stores in the promising emerging markets of India, China and other Asian markets. It said it would open up to 40 stores in India, to begin with, as part of its strategy to tap revenue opportunities in the market other than North America where sales have somehow cooled in recent times. The maker of Old Navy clothes said it is partnering with Arvind Lifestyle Brand Ltd to open the Indian stores, which will first be located in Delhi and Mumbai.

According to Gap’s president of global operations, Steve Sunnucks, India is a vibrant emerging market that occupies and important position in their global expansion. The Gap Inc. (NYSE:GPS) also has plans to move forcefully into more places in China where it also expects sales to triple over the next 3 years to about $1 billion.

Published by Nicholas Maithya

Nicholas is a Financial Analyst by profession, who enjoys writing about investments, technological developments, business, economics and other financial topics at various financial publications. Join him here on Wallstreetpr.com as he endeavors to deliver to you the latest breaking news on the above mentioned fronts. Contact him by email at [email protected] or follow Nicholas Kitonyi @nmaithyak on Twitter.



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