Gap pole-axed investors after the close yesterday. The specialty discount bin reported a 5% decline in same-store-sales for December. Analysts were officially expecting -3.9% but I doubt they had any idea given how promotional Gap was during the holidays.
I shopped at the Gap on Black Friday. I took pictures because I’m that kind of dork. From the upper left those are pictures of Gap, Sean Connery disguised as a Japanese ninja in “You Only Live Twice” and a heap of what look like sweaters selling for 60% off at Banana Republic.
I’ve worked with the Gap. It’s a proud organization. I took those pictures at 7am on Black Friday because that’s when stores look their best for Christmas. Whoever told Gap Inc store managers to make their sales floor resemble a Haight Ashbury Salvation Army is an inept, sadistic bastard. The stores never had a chance and the store managers knew it.
I try to spy when I go to malls. I rarely buy anything and I take a lot of pictures in stores. I’m recognizable among a very select set of people, most of whom work in finance or retail so my hiding is a little absurd but I do it anyway. A little like a 6’3″ Scottish guy pretending to be a ninja.
On Black Friday I bought the Banana manager a coffee. She was looking at a month of warding off anarchy. If you’ve worked retail that table of sweaters is a ticking time bomb. The first time a customer looks for their size at the bottom of a stack it’s going to become a 60% off laundry hamper. I handed her the coffee without a word. She looked confused then smiled wanly. I may have heard a small whimper.
Anyway, Gap is an operational trainwreck and that shouldn’t be a shock. In their press release the CFO says she’s excited to bring in the spring merchandise. Here’s the thing: there’s no place to put it.
Gap came up short on revenue despite deep discounts. That means they’re still choking on sweaters and markdowns from winter.
I don’t short specialty. The stocks never go down in a straight line. Fundamentally Gap is terrible. When it turns there will be time to buy. Until then GPS is a murder pit. Yesterday the stock was up 5% before falling 8% after hours on this sales report. Specialty is a cruel mistress that way.
Retail has been strong this year. Sales were good (though most cos don’t report monthly anymore). I’m long LULU and ANF.
Here are the rest of the comps reported yesterday.
Going to a mall to do some spying does not sound like much fun to me.
Malls are still dying (I think).
The last time I actually went to a mall (Sears) was about 4 or 5 years ago to check out a “drop in” electric stove that was marked down considerably. Little did I know the entire first floor of Sears was closed and the only thing left were the appliances ,Craftsman outdoor equipment, tools, etc.
Sears? No… that doesn’t sound fun at all.
Malls visits are mostly a holiday and back-to-school hobby for me. That’s the best place to see the consumer at work.
Macke makes retail investing actually sound interesting
Good morning Mr. Macke,
Wednesday night I decided GPS was a piece of shit that should be shorted first thing Thursday morning. So at 9:32 I took a short at 24.88. Much to my amazement my piece of really good shit flew straight up all fuckin day. What’s a guy to do in the first week of the year with such a BS move. Well, I shorted it again at 10:37 @ 26.47 and again at 2:03 @ 26.41. I was aware they had an after hours announcement and thought maybe tomorrow will be my day.
I kept monitoring after hours and saw my short down as low as 24.65. I really didn’t want to turn my 3 short positions to turn into a day trade but just couldn’t help myself, it really rounded out my week quite well. Put in the Buy to Cover order at 24.75 and dropped all 1200 at 5:26 (100 and 1100) @24.72 making for a 4.76% gain.
What a ride. The unfortunate thing is that I used all 3 of my day trades with Scottrade in a single shot. But I will have a good week adding this to a 3.3% gain on a EXP short covered on Wednesday. Now I need all the longs I took in November and December waiting for the Santa Clause Rally, that didn’t materialize this year, to maybe make money by next Christmas.
Have a great day, your contribution to the site is very informative and always fun too.
Quality merchandise is not to be found at the mall. All those pictures look like Walmart to me. Macy’s is the same. Premium brands used to mean something. Nowadays paying more than Walmart or Old Navy for a pair of jeans just means you got ripped off.
The great thing hiding in that chart is that Gap is the only company listed with a negative sales surprise. That can’t be easy to pull off.
Marshall’s and like stores must be salivating at the goods they can get crazy cheap now.
They are closing the Gap + Gap kids store at our local mall in South Bend, IN….just minutes from the University of Notre Dame. The location is at the center of the mall, arguably one of the most “prime” spots in the entire shopping center. Kind of surprised they decided to shut down the location completely vs moving to a spot in the mall with less sq ft, less rent, etc. I believe they are closing some Indianapolis locations as well.
H&M and Uniqlo are killing these guys.
Zara is poised outside the US like a big death star.
Yup. I forgot about Forever 21 too. If you care about how you look, you’re not buying from Gap.
Mentioned this to the better half sitting here with me. Her response………”that does not surprise me. Their prices are horrible and their selection of clothes just isn’t appealing.”
That from one of the most intrepid shoppers you will ever meet.