Despite the strong brand portfolio and international presence, sales estimates are low and continuously reviewed. The fact that Guess reported declines in its revenue every single quarter of fiscal 2013 is a matter of great concern.
The Gap Inc. (NYSE:GPS): Stock price up 31% this year
The Gap Inc. (NYSE:GPS) is a global specialty apparel company that offers apparel, accessories, and personal care products for men, women, children, and babies.
The company’s stock price has advanced by 31.7% for this year, closing at over $40 on May 15. This shows that investor confidence is up and that The Gap Inc. (NYSE:GPS) is being seen as an investment opportunity. The company has registered positive year-over-year comparable-store sales growth almost every month since Feb. 2012, with the only exceptions being April and June. Total sales rose 5% in April 2013 to reach $1.21 billion, up from $1.15 billion a year ago. Gap’s conservative capital management, free cash flow generation and strong balance sheet are also good factors to consider.
The Gap Inc. (NYSE:GPS) will report its first quarter earnings on May 23. Management expects earnings to be $0.68 to $0.69 per share, as opposed to last year when they were $0.47 per share.
Regarding international strategy, however, the company’s plan involves splitting each country by brand in order to maximize growth. I believe this global expansion plan is a matter of concern, especially since the company is still reporting negative international comp results. However, reducing its dependence on the North American specialty business is something absolutely necessary.
Bottom line
Iconix Brand Group Inc (NASDAQ:ICON)‘ diversified portfolio of well-known brands and acquisition strategy are major strengths in its business model. Although sales are not extremely satisfactory, I would recommend buying this stock.
Guess?, Inc. (NYSE:GES) is not a company I would have in my portfolio for now. Some aspects of the company are promising, but until sales pick up I would stay away from this stock.
The Gap Inc. (NYSE:GPS) looks attractive when trading below the industry average, based on forward earnings estimates. Now that the price has increased enough I will remain neutral on the stock. Hopefully, the next second quarter report will make me change my mind.
The article A Look into the Apparel Market originally appeared on Fool.com and is written by Damian Illia.
Damian Illia has no position in any stocks mentioned. The Motley Fool recommends Guess?. The Motley Fool owns shares of Guess? Damian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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