Gap Stock Price Unexpectedly Rose 15%, Can It Continue Successfully?

Speaking of fashion brands,

It seems that it has become a brand that has not been mentioned. For a long time, the news about their family (if you still pay attention to it), the headlines are more often "falling", "down again" and "full line collapse".

However, on the last day of the National Day holiday, the company's stock price jumped by 15.3% to $26.26 a share.

What makes Wall Street happy is that the demand for Old Navy Global brands has increased, and the Gap Inc 9 sales decline in the same month (3%) is lower than expected.

To know that the 15% share price increase has created a new high in the past eight years, and everything is slowing down because of the decline.

In the eyes of Wall Street analysts, Gap's little sign of recovery (really a little bit) means that it and even its competitor, Abercrombie & Fitch, can finally come back from the impact of H&M and Forever 21.

The company also said that if it were not for the big fire that happened in New York in August, sales in September would probably be the same as last month.

It seems that both analysts and Gap themselves are full of confidence in the recovery of the company. The reason for such optimism is that Old Navy, which accounts for 40% of the company's total sales, has increased by 4% over the same period last year.

However, Old Navy is not the first time to be bullish.

In fact, "in the struggle of Gap group for 10 years, Old Navy was once the most desirable brand."

Old Navy, founded in 1994, is one of the three largest brands of Gap and the latest of the three brands. Compared with Gap and Banana Republic, the price of Old Navy is much cheaper.

In early twenty-first Century, Gap began to wave farewell to his golden age.

This once "

After several major strategic mistakes, he finally succeeded in running away from his loyal customers over the age of 35, and he failed to benefit from young people and gradually lost himself.

The core competitiveness of the company, coupled with the more aggressive competitors such as Zara, H&M, Forever 21 and so on, GAP's financial reports almost fell into the embarrassment all the year round. In 2015, when it came to the company's earnings, it used the word "horrible".

However, until 2014, Old Navy was a rare highlight in its earnings. Many people believed that Old Navy could help the group to turn the tide and lead Gap back to its peak.

Old Navy's strong performance is closely related to its president, Stefan Larsson.

The executive, who worked for H&M for 15 years, helped Old Navy achieve a 3 consecutive year of profit growth after its entry into GAP in 2012, and its sales volume increased by $1 billion.

However, in early October 2015, Larsson was selected by Ralph Lauren as CEO.

GAP 2015's fourth quarter earnings report also showed that as of January 30, 2016, the group's same store sales fell by 7%, of which Gap, Banana Republic (Banana Republic), Old Navy (Old Navy) three brands of the same store sales fell 3%, 14%, 8%.

Especially after Larsson left, people began to question whether Old Navy could really lead.

Revival.

In May of this year, GAP group announced the closure of its 75 brand overseas authorized stores, its brand Banana Republic and Old Navy.

These include all about 53 Old Navy stores in Japan.

It is reported that the closing of stores will result in a loss of about $250 million in sales in Gap, but it can also save 275 million dollars in pre tax costs per year.

Compared with the fast fashion brands of Japan, UNIQLO, GU and Old Navy, they do not have strong competitiveness. Choosing to quit is a wise move.

Of course, you can say that it is a belated shot.

However, the author is more curious about whether the sales increase of Old Navy in September will continue in the future, or is it just another illusion of revival in Gap group's 10 year struggle?