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Why Gap Stock Is Falling 7% Today

By Rich Duprey – Updated Jun 11, 2020 at 11:59AM

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The retailer has been on a tear since the coronavirus outbreak.

What happened

Shares of Gap (GPS 3.53%) fell almost 7% in morning trading Thursday as the market braces for the impact from a second wave of COVID-19 cases.

So what

The retailer has more than doubled in value since hitting a low point in March as the coronavirus outbreak was declared a pandemic, but Gap's stock has given back 26% since hitting a recent high of $13.75 per share.

Gap still has significant problems as stores reopen. Its Banana Republic, Gap, and Old Navy brands have suffered from declining sales for a year or more, even as it updated investors on its progress and noted its stores had recovered 70% of their pre-pandemic sales levels.

Woman walking through an Old Navy store

Image source: Gap.

Now what

Getting its stores open and running again is key to Gap and other retailers returning to a sense of normalcy. But the company also needs to prove its business will not just tread water but be able to ride a wave of sales higher.

For the moment it needs to contend with the pandemic, a possible second wave of new cases, and side issues such as mall operator Simon Property Group suing it for failing to pay rent.

Investors taking profits after the big run-up in Gap's stock, especially at a time of renewed uncertainty, is not a surprise at this point.

Rich Duprey 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
$8.50 (3.53%) $0.29
Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
SPG
$90.22 (0.52%) $0.47

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