Can Gap Reinvigorate

clothing

The trend, but since its heyday in the late 90s, it has been beset by overstretched stores and cold deficits.

Gap's sales revenue has finally entered the right track this year, reaching 14 billion 500 million US dollars as in 2002.

That year, Gap accounted for 8.3% of the clothing expenditure of Americans, up to 9.6% in 2003.

Last year, it accounted for only 7.6% of domestic clothing expenditure. In fact, this figure greatly underestimated the loss of domestic share, because Gap's overseas income has been rising in recent years.

Gap's share price has also stagnated, which has dropped 16% this year, just over 18 US dollars per share.

In 2007, Glen Murphy became CEO of Gap. He said that in the past ten years, people have done what we did to others in 90s.

Clothing chains and discount stores have expanded rapidly over the past 10 years. As a result, the market has increased a lot of business space, and the prices of these stores are also very tempting.

The new competitor has Forever 21, which is a fast-growing private enterprise; Sweden's Hennes & Mauritz; Spanish Company's Inditex management Zara and Japan's Fast Retailing's UNIQLO, let alone guide the domestic trend of Abercrombie & Fitch and hypermarkets such as Taghit.

To some extent, their target consumers are the same as Gap's 3000 Gap, Old Navy and Banana Republic.

Despite many years of struggle in the clothing business war, this year is the most difficult for Gap and its shareholders, mainly due to the sudden rise in cotton prices in spring.

Gap bought cotton for sale during holidays at the wrong time, resulting in a significant increase in costs. At the same time, because of declining sales in some stores, Gap's earnings per share in 2011 dropped by 20% to $1.5.

In the past few years, however, Gap has made some wise moves and laid the foundation for future performance and rebound in share prices.

According to Wall Street's expectation, although the stock price has not risen, the stock price may reach at least 22 dollars next year, while the Gap may reach 12.5 in 2013, and the dividend may increase by 2.4%.

Murphy and CFO, Sabrina Simmons, did a very successful job in consolidating the company's financial discipline. They raised the profit margin as much as possible, repurchased large quantities of stock with free cash flow, and invested a lot of money in the fastest growing network sales and overseas sales.

Murphy and Simmons carefully planned the company's marketing strategy. They reduced the size of the country and expanded the international sales, and planned to close or merge 200 Gap stores, reducing the number of stores to 700, and adding more than 50 outlets to 250.

By 2013, 1/4 of Gap's 900 stores will be direct sales outlets.

Direct selling stores are more competitive than full price stores because of low management fees and operating costs.

Gap is also preparing to pfer GapKids sales to Gap stores.

Gap has made a lot of efforts to improve store performance.

The average cash inflow of employees increased by 66% in 2010 over the past few years in terms of the number of employees and the per capita sales revenue of employees, which expanded the company's ability to leverage business leverage.

Since 2004, Gap has increased its sales revenue for more than one year for the first time, and its operating revenue has increased by 8.4%.

The most important challenge now is how to reactivate Gap's product mix and store design to stimulate consumers' desire to buy.

But Wall Street doubted whether the company could make the pition, so only 6 of the 32 analysts suggested holding the company's shares.

The third quarter results were not satisfactory. Murphy thought that the average sales decline of all shops was not acceptable, and it also disguised the fact that the sale of women's clothing was 10% lower than that of the 5%.

The Gap store in North America is not in good condition. Despite the good sales of jeans, the design of women's wear has not won the resonance of consumers. Banana's performance is not good enough. The largest department Old Navy is not only troubled by high cost, but also its core customers are not well-off now.

Murphy pointed out that Old Navy will increase promotional efforts in this holiday shopping season. Each sweater will not exceed 15 dollars, and the implementation of the entire 40 percent off discount, which means that this holiday shopping season can not save Gap.Barclays Capital analyst Staci Parke said, Gap began to be outdated, although this is not news.

Some people think that Gap was the beneficiary of social pformation in 90s, when the fashion trend was more casual, but then it did not keep pace with the times.

The location of Banana Republic is classic urban white-collar and weekend casual wear, while Old Navy pays more attention to children's clothing, integrating popular elements and cheap cloth, and striving to make their clothes wear out before children grow up.

But Old Navy stores are always messed up and look like a maze.

Now the company has redesigned the store of Old Navy to make it look more compact. Although many improvements have been made, it has yet to win the praise of consumers or investors.

Every few years, Gap brings forth new ideas or invites new designers to speed up brand metabolism.

This year, Murphy set up the Gap global creative center in New York instead of continuing to carry out core product design at the headquarters of the company in San Francisco.

According to the company's sample survey of 1000 women who buy high-end jeans, Gap jeans are popular in the first place or the second place, and close to the expensive professional jeans producers Seven and Joes Jeans.

In fashion, Gap's attitude is very strange.

While H&M and UNIQLO made lots of cheap copies of fashion magazine cover clothes, Gap disagreed.

Murphy said, Gap will never pursue the trend, they will only interpret the trend.

Investment

People always hope that Gap can get on the right track, but they may neglect the growth rate of online sales and overseas stores. These two businesses are enough to support the whole company's performance.

China

Development.

Through extensive research on the Chinese market, Gap13 opened its first branch in China a month ago, and will open 30 new stores in 2012.

Murphy said that there are two most experienced companies in crowded commercial centers: Gap and Nike.

clothing

The market is huge, with sales of up to $1 trillion and 400 billion a year, of which four companies are most competitive: Inditex, Fast Retailing, H&M and Gap.

And we are at the same level in China.

Murphy believes that the advantages of Gap are multi brand and multi-channel, and is a model of American fashion. Moreover, Chinese people have strong demand for clothes with Gap logo.