The Gap, Inc. (NYSE:GAP) was among the stocks Jim Cramer discussed on Mad Money, along with the recent sell-off in the market. Cramer mentioned the stock while highlighting the woes of the athleisure space. He commented:
How much worse can the athleisure space get? If I say this group’s going out of style, that is putting it lightly… Gap’s athletic division just reported net sales down 12%. They brought in some former Nike executive to right the ship. So far, it hasn’t worked. It’s early… A few years ago, athleisure was one of the, it was the best consumer trend out there… Back when athleisure seemed unstoppable, it felt like a lifestyle shift. People were wearing sweatpants while working from home, wearing workout clothes and sneakers to dinner… Athleta was supposed to be Gap’s growth engine… Once COVID hit, athleisure practically became the uniform of the pandemic. Maybe that made this trend look more durable than it really was, though. But once the world went back to normal, people went back to the office and started wearing regular clothes again…
Now, Athleta tells the same story. The Gap overall has been doing better, but Athleta remains the weak link. In the Gap’s latest quarter, Athleta’s net sales fell 12%. Same-store sales were down to 11%. Awful. In the previous quarter, Athleta’s same-store sales were down 10%. Gap says it’s rebuilding the brand and launched a re-image assortment in the second half, which I guess is better than doing nothing. Athleta was supposed to be a growth brand though, but now, it seems like a long turnaround project. We don’t like those on Wall Street… Gap, the parent of Athleta is even lower, trading at nine times earnings… Athleta can work if Gap rebuilds the assortment, but right now, the burden of proof is on them.
A technical stock market chart. Photo by Energepic from Pexels
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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