It’s Gap, Not Gape

If you are like me, you remember The Gap Inc. (NYSE:GPS) for its relatively affordable clothing during your college years.  You had to pick up a few of their polo shirts and Gap jeans to impress the ladies.  Then there was also there fledgling offspring company, Old Navy, which became a juggernaut as it offered similar clothing styles for even more affordable prices, a key factor in making the college and school kids decide to buy.

Gap is expected to report earnings today after market close.  A consistent theme for this season’s earnings is that the analysts are very pessimistic these days, giving a “the profits are (more than) half empty”  outlook.  The nice thing about this is that it often makes it easier for the companies to surprise with slightly stronger sales and employing intelligent cost- cutting measures or marketing strategies.

Gap is expected to report profit of $0.32/share, which is up $0.05/share from 30 days ago.  The dang analysts are finally getting more optimistic.  Gap’s recent stock price performance seems to reflect this optimism as well.  Given that Old Navy has been revamped to cater to the penny-wise person during this “crappy” economy (sorry, don’t know how else to say it), we would expect Old Navy to give The Gap Inc. (NYSE:GPS) a good boost from its back-to-school shopping days.  Based on recent stock movement, we anticipate that they may surprise a bit and the stock could jump up on that news.

So, raise a glass and let’s cheer to a hopefully pleasant surprise from The Gap and an improved economy.  If instead The Gap disappoints and leaves you gaping, at least you have the glass in your hand and can drink.