Gap Stretches It

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Upward facing dog pose, anyone? Gap's (NYSE: GPS) snapping up Athleta, which offers apparel for many sports including the hot yoga segment, for about $150 million in cash.

Joining as the fifth brand featured on Gap’s e-commerce website, Athleta will join Gap, Banana Republic, Old Navy, and Piperlime. (Remember Piperlime?) Customers can purchase merchandise from any of the brands on the website, which is convenient if online shoppers are actually interested.

Granted, the fact that Gap can easily make strategic acquisitions during an economic downturn (a good time to do so) underlines one of its strengths, and that's its cash-laden balance sheet; at least its hands aren't tied due to onerous debt loads. It has $1.68 billion in cash and no long-term debt.

However, as much as Gap is touting its entry into the $31 billion "women's active apparel" growth segment, the yoga apparel aspect doesn't excite me. For example, I've long been bearish on lululemon athletica (Nasdaq: LULU) in part because there are plenty of rivals at all different price points.

There's VF's (NYSE: VFC) Lucy, as well as prAna, which Liz Claiborne (NYSE: LIZ) recently sold as it whittled down its brands. You can buy yoga apparel at a variety of retailers, including Target, J. Crew (NYSE: JCG), and Urban Outfitters' (Nasdaq: URBN) Anthropologie concept, to name just a few.

And of course, heaven forbid consumers figure out you don't need expensive outfits to do yoga, kind of like you don't need to look like you're in the Tour de France to take a leisurely bike ride. With our current economic difficulties, I have a funny feeling that pricey accoutrements for sports activities are in serious danger of becoming so last decade. (Yeah, I'm not sold on Under Armour (NYSE: UA), either.)

Other recent news on Gap includes how it's expanding into Mexico, Egypt, and Jordan through franchisees. While it can be a high-margin endeavor, retailers also lose some control over the brand. At any rate, we'll have to see if Gap can prove that some of these initiatives can make up for continued weakness in its business here in the States.  

I don't think the Athleta acquisition will hurt Gap, but I'm not convinced it'll really help it, either. One thing's for sure though: Gap's years of underperformance might imply that it sure does know yoga's "corpse pose." We'll have to see if these moves result in any reanimation of the company.

Here's some related Foolishness:

• Last quarter, I still didn't find Gap compelling.
• In July, my Foolish colleague Kristin Graham thought Gap will burn your portfolio.
• Yet another Fool nominated Gap as the Worst Stock for 2008.