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Buy, Sell or Hold Gap?

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    Caris & Co. retail analyst Dorothy Lakner gives her outlook for the Gap brand

  • Duration 4:08
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All right Sandra thanks so much we'll GAAP beating the street the past four quarters can it do it again the retailer reported first quarter earnings after about Keith gay.

But with the stock up nearly 50%.

Year to date should you buy sell or hold ahead of the earnings report.

-- flatteners managing director at specialty retail at Harrison company covering the capped I think welcome to you thanks for having me.

The headline the gap is he's colored jeans everywhere you look walking down the street see people wearing -- -- -- fashion -- -- the industry is so fickle so my question is are right you knocked it out of the park this time gap but what's next -- -- with them.

-- -- that they're not only knocking out -- park in terms that the bottoms business which has been a good business for them for several years now.

Color is a big trend they got right on -- but I think the important thing is they're getting they're selling more tops are selling more other pieces of an outfit.

And that's what's really I think putting the numbers -- can they follow that up.

Well that's always that's always the biggest question with -- -- retailers but usually once they get on a positive track and and they are definitely I would say on one now.

The merchandise is moving in the right direction and I would say it should continue and you could see a continuation of a good trend merchandise for for a couple of years of -- you know keep it keep it right.

Eight when you look at the stock we're just looking to sock -- -- 4% in the past week but he is up 50% year to date there's a lot of hope it seems.

Built into what they're doing -- -- earnings what do you think the earnings are going to be like this afternoon where do you think a stock that's from the.

Well I think you know what's important this afternoon I mean obviously they -- down they'd be announced their sales -- a few weeks ago when he -- up the guidance 44 to 46 cents worth 46 cents.

For the quarter.

But I think you know what's also important is that as we continue to see.

Cops move.

There's a lot of leverage and gaps model they've kept expenses very -- they're keeping inventories very lean.

If you get that improvement -- com you should get pretty big leveraged to the bottom line so I think that's where we could see her earnings estimates move up a lot more than where they are now so what about the other brands.

That branch off the gap.

Old navy right banana republic -- -- -- supporting the gap or they're liabilities I don't know I don't think they're liabilities sound banana republics been doing batter its its been doing.

Better than the others all along and it's women's business has been improving so I think bananas good.

I'm old navy had some issues -- its marketing not really well targeted.

Earlier this year -- and it's pricing was also a little bit awful bit too high you know we've had this issue with higher product costs for always retailers it's gonna be -- -- -- the back half of the year.

But old -- -- got its pricing back on track its marketing seems to be working better so I think old navy is is also good ago.

This isn't turnaround story I mean this is a company that for a long time we talked about the fact.

The big gap had really stumbled that J.

Crew was eating its lunch people weren't going into the stores that -- really lost step that banana republic have lost that.

I mean do you feel like they've really gotten it back or is it just a temporary.

You know -- Britain are gonna -- It I mean that's always the big question but I think.

I really do think this time of the product just is so much better than it's -- him that there are up against.

Obviously five and sometimes six years of negative -- so.

You know hope springs eternal but they're always skeptics -- -- great time however.

They've gone back to what gap was known for and I think that's what's bringing more customers into the stores adores me.

This segment of retail given a broader economic challenges -- gas prices have come down that's bit of good news that unemployment is still very high it seems like this segment of retail is really the sweet spot.

For the American consumer.

Right I think I think that's true and I think we've seen you know last week we saw consumer sentiment numbers that were the best we've seen in four years since I think January of 08.

We heard from Nordstrom last week -- the -- for the affluent customer credit trends are getting better.

So while there still are some negatives gas prices are lower that's that's -- help so I think overall.

You know we're seeing some better economic news and we're seeing that in the sales numbers that word that we're getting dark black -- covering the gap for a thanks a lot thank you appreciate your time thanks.

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