Gap Digs Out of a Fiscal Hole

GAP Digs out of a Fiscal Hole and Expands

GAP Leadership Re-configuration

Fiscally, things have been going quite well for GAP INC., in particular since a new CEO - Paul Pressler - showed up to take the GAP reins in September of 2002. "Sales...are back on the upswing..." And earnings have also "resumed their upward trajectory" (Karr, 2004). What is even better for investors / shareholders is that as of February 2004, the price of a GAP stock has "doubled Karr reports. Still, GAP is saddled with about $2.8 billion in debt, according to the article in Daily News Record.

Notwithstanding that debt, GAP "could find itself able to renegotiate its credit agreement" - and hence, "shed itself of current restrictions" on dividends and stock purchases, which could result in savings.

There is additional positive corporate news from GAP (WWD, 2004); to wit, Jorge Montoya - who is 57 and has gained a wealth of experience serving Procter & Gamble as head of their Latin American global snacks and beverage division - has been appointed to the GAP board of directors. He replaces Charles Schwab (of The Charles Schwab Corp.), who served GAP for 18 years, but stepped down due to time constraints.

GAP Acquisition / Diversification

Meanwhile, GAP is reported to be seeing a "growth vehicle" (Molin, et al., 2004) in the form of a new division - targeting the "cheap and chic styles" of Hennes & Mauritz) - allowing GAP to diversify beyond its present pricy, upscale collection. This would put GAP in a position to compete with hugely successful stores like Target, Wal-Mart, and other retailers whose fashions include name brands but whose prices are lower.

Also, according to an article in just-style.com, GAP is not standing still in developing its foreign markets; indeed, GAP will be opening three new stores in Japan by the end of 2004 - in Takasaki, Asahikawa, and Kisogawa. - and in addition, GAP's "Baby GAP" will open its doors in Isetan, Japan, this summer. When these three stores are fully functional, it will mean GAP has 70 stores in Japan; GAP is "now the most successful foreign retailer in Japan," just-style.com's article reports.

Ideas for Improving the Competitive Advantage of GAP

One thing GAP should give consideration to and that is, to enter the outdoor clothing and gear genre, and couple that visionary marketing launch with a series of mega-benefit concerts and slick promotional pitches to fundraise for the environment.

The market for outdoor gear and clothing of course is jammed with successful companies now, but with a creative, sincere and aggressive marketing campaign, GAP could take a substantial bite out of that market. GAP could either buy some small but successful company, or go into co-promotional campaign with existing, high-visibility outdoor gear firms, to accomplish this task.

By reaching out to the extraordinarily large outdoor and recreational-related market, GAP could steer millions of people into their stores to buy cool gear, while at the same time steering them into activism to preserve what wilderness and wetlands and open space there is left on the planet. Every item for sale would have a little tag that reads: "A portion of the proceeds from this item go to preserving wilderness, habitat, animals."