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Why The Gap and Other Retailers' Stocks Are Up Today

By John Rosevear – Updated May 18, 2020 at 2:36PM

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Promising news on a new COVID-19 vaccine sent shares upward.

What happened

Shares of several retail-chain operators were trading higher on Monday, amid a broad-based market rally driven by promising news from an early COVID-19 vaccine trial.

Here's where things stood as of 1:45 p.m. EDT for these three stocks, relative to their closing prices on Friday.

  • American Eagle Outfitters (AEO -3.09%) was up 10.1%
  • The Gap (GPS -2.15%) was up 6.6%
  • Urban Outfitters (URBN -0.66%) was up 12.3%

So what

The broad market's Monday rally was kicked off by news that interim data from an early study of a COVID-19 vaccine developed by Moderna (MRNA 0.15%) showed positive results. While the data is very preliminary, and an approved, mass-produced vaccine is still many months away (at best), investors took it as good news and bid up shares of many companies that have been hit hard over the last couple of months.

A Gap sign outside a store.

Image source: Gap.

That news, plus growing investor optimism around retail as more stores reopen in the U.S., was likely driving the gains for these three stocks on Monday, as there was no immediate news on any of the three. 

For reference, here are the most recent developments on each of the three:

  • American Eagle Outfitters said in early May that it had reopened 43 of its brick-and-mortar stores and that it planned to have about 600 locations open by the end of May. The company raised a bit over $400 million via a bond offering in late April to bolster its balance sheet until all of its stores reopen. 
  • Gap's most recent update to investors was on May 7, when it outlined a series of moves made to bolster its balance sheet. It said at the time that it had completed an offering of $2.25 billion in senior secured notes, established a new $1.868 billion revolving-credit line, and paid off $500 million outstanding on its older line of credit. Gap said on May 6 that it expected to have 800 stores reopened by the end of May.
  • Urban Outfitters hasn't issued an update to investors since the end of March, but the company has begun reopening its brick-and-mortar stores in 26 U.S. states. 

Now what

The good news for consumer-discretionary investors is that all three companies are expected to update their shareholders soon. Gap will hold its annual meeting of shareholders tomorrow, Urban Outfitters is scheduled to report its quarterly earnings tomorrow after the market closes, and American Eagle Outfitters will report its fiscal first-quarter earnings on June 3.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$8.21 (-2.15%) $0.18
Urban Outfitters, Inc. Stock Quote
Urban Outfitters, Inc.
URBN
$19.65 (-0.66%) $0.13
American Eagle Outfitters, Inc. Stock Quote
American Eagle Outfitters, Inc.
AEO
$9.73 (-3.09%) $0.31
Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$118.25 (0.15%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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