Gap Inc. founded in 1969 by the Fishers took the world by storm with a remarkable stock performance this Thursday. Against all expectations, Gap managed to raise its revenue considerably thanks to a dramatic surge in sales in December. While the worldwide clothing retailer expects the year of 2016 to be more prosperous than the higher end of its forecast, all other major clothing retailers experienced only weak winter holidays performance.
On Thursday, Gap Inc. went through an impressive change of events really quickly. The day started off with a 4% decrease of its value in the stock market. However, things turned out to be completely different the same day. During after-hours trading, the Gap stocks grew above 10%. The shares of the company reflect the high demand for several of its most popular brands, namely Gap and Old Navy.
Due to the impressive success of Old Navy, a brand that follows a low-apparel business form, the company invested in revamping its other famous brands, Gap and Banana Republic. As a consequence, the Gap sales increased by 1% in December. The evolution is satisfactory for the organization, as the same brand scored a 2% decrease the year before. However, the major achievement was accomplished by Old Navy and its 12% increased sales. The brand registered even a more emphatic comeback, as its revenue was down by 7% just a year earlier.
While the economists expected a 0.7% decline for Gap Inc., the 2016 results are far from these predictions. Instead, the comparable sales of the company rose 4% in December. Simeon Siegel, an Instinet analyst, was able to perceive the change of events before it happened. By looking at the numbers, he managed to detect an improvement in the performance of the retailer ahead of time. Gap was down to 10% in September, while the following two months recorded a drop of 7% and 3% respectively. December was just the visible positive outcome of the company’s efforts to improvement.
Other major clothing retailers didn’t manage as well as Gap. They are still struggling with a more powerful competition presented by fast-fashion stores such as H&M or Forever 21. The winter holiday performances of fashion chains like Macy’s Inc and Kohl’s Corp were well under the negative expectations.
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