It hasn’t been a great few years for mall-facing retailers like The Gap (GPS), thanks to growing competition and declining consumerism. But there are some signs that things may be turning around. Gap’s recent addition to a major list certainly didn’t hurt, and neither do expectations about its second-quarter numbers, which are due to be released soon. That was enough of a killer combination to boost Gap stock by over 4% in the closing minutes of Wednesday’s trading.
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Gap managed to land itself on Citigroup’s 30-day Positive Catalyst Watch list, thanks mainly to expectations of a “big” beat when it reports second-quarter earnings. That big beat will likely be the result of several factors ranging from better gross margins to improved expense management.
Further, Citigroup looks for Gap to be able to cut back on promotional pricing despite seeing a decent expansion in gross margins in 2023’s second half. That might see a little change around the holidays—as usual—but for the most part, Gap should be able to run normally.
Marketing Boost
Meanwhile, retailers like The Gap have long understood the power of good marketing. And recently, it rolled out its Fall 2024 “Get Loose” campaign backed up by Grammy-nominated Troye Sivan. Further, Sivan will be supported by the CDK Company, a dance group, which will combine to show off The Gap’s line of denim for the cooler months to come.
With Thundercat hit “Funny Thing” playing in the background, the campaign will, reports note, highlight Gap’s extensive, half-century-plus history in denim. Sivan will even be hooking Gap up with a custom playlist for in-store use.
Is Gap a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GPS stock based on seven Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 164.92% rally in its share price over the past year, the average GPS price target of $27.31 per share implies 10.84% upside potential.
