Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of apparel retailer Gap
So what: Gap's January same-store sales declined 3% on heavy clearances, but it was better than the 4.9% drop that analysts had estimated, suggesting that it is finally building some momentum. It's no secret that Gap has struggled in recent years, but a shakeup in management and the institution of a "Global Creative Center" to improve the design process seems to be taking hold.
Now what: Looking forward, management sees fourth-quarter EPS of $0.41-$0.42, which is well above the consensus of $0.35. "January was largely clearance-based, and we're pleased we successfully cleared holiday inventory," said CEO Glenn Murphy. "As we transition to a new year, our teams are focused on making the necessary steps to improve our business performance in 2012." Jumping on a rally isn't exactly ideal, but with the stock still trading at a clear P/E discount to the industry, Gap might have some decent room to run.
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