#2 - Gap (NYSE:GPS)
Gap (NYSE:GPS) is contributing to the PPE shortage by using their excess production capacity to produce masks and protective gear. They are also using their global supply chain contacts to help procure additional masks and gowns.
In addition, the company has a freshly inked deal with IMG to be its first ever multi-brand, exclusive licensing representative. Essentially, IMG will use its global reach to introduce Gap brands to new audiences. The deal will initially focus on the Gap, Banana Republic, and Janie and Jack brands. The deal may eventually extend into additional categories such as baby equipment, baby care, home décor, textiles, and furniture.
With that said, let’s get the elephant out of the room. Although the company had a strong balance sheet, the company was burning through cash quickly. However, the cash-strapped company recently raised $2.25 billion in a debt offering. This gives the company the liquidity that should help it avoid bankruptcy. The company probably needs to jettison its Gap brand, but the IMG deal may forestall that decision.
Investing in retail stocks is always precarious, and this is no different. But Gap should be able to weather the current storm. The Covid-19 pandemic will likely accelerate decisions that companies were going to have to make anyway. While that is not good news for some employees, it could be very good news for shareholders.
About GAP
The Gap, Inc operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls.
Read More - Current Price
- $22.12
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $20.39 (7.8% Downside)
