Jim Cramer on Gap: “The Turnaround’s Not Playing Out as Well as We Had Hoped”

The Gap, Inc. (NYSE:GAP) was among the stocks Jim Cramer was focused on, as he discussed Mad Money’s latest game plan for the week. Cramer showed mixed feelings about the stock, as he commented:

What… happened to the stock of GAP today? Last night, the retailer reported a mixed quarter. Gap brand’s doing well, but Old Navy did a little worse than anticipated, while Banana Republic and Athleta also missed expectations. The reason the stock plunged over 50% today, though, is that Gap gave soft revenue guidance for the current quarter because of weakness in the Old Navy division.

It’s the largest division, and the company cut its full-year sales forecast even as they raised their earnings outlook. Now, the stock is now back to where it was in late 2023, which was just a couple of months after CEO Richard Dickson took over and started to orchestrate a real turnaround. So what do we do now with the stock? At this point, it’s trading at less than 9 times the midpoint of this year’s earnings guidance, very solid dividend, good buyback. On the other hand, the turnaround’s not playing out as well as we had hoped.

Photo by AlphaTradeZone

The Gap, Inc. (NYSE:GAP) sells apparel, accessories, and personal care items for men, women, and children. The company’s brands include Old Navy, Gap, Banana Republic, and Athleta.

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