The store sees its problem as reacting too slowly to changes in fashion, which has the effect of boosting inventories and chomping on margins. Add in too many stores and a commitment to its taste in merchandise. That litany of troubles is not unlike those that faced Gap Stores Inc. (NYSE: GPS) a few years ago.
Since the beginning of 2012, Gap’s share price has doubled while A&F’s has fallen more than 30%. What did Gap do to turn its ship around, and could A&F follow the same rule book?
The first thing that Gap did was add some color to its denim product line to get customers back into the stores. The customers liked what they saw and Gap found that it could sell more merchandise at full price, boosting its margins. A&F has stuck to its guns and simply has not been willing to make the overhaul to its merchandise that Gap embraced in late 2011.
Gap also closed stores — 189 since 2012. A&F is also closing stores — 180, beginning last year and continuing over the next few years. A&F’s problem is that it will not bite the bullet and close the stores quickly. Dragging the closings out over several years will do nothing to help build margins again.
And then there is management. Gap’s chief executive has been with the company since 2007, and he has been willing to make the changes that the company needed to make in order to become a relevant retailer again. Mike Jeffries has been A&F’s CEO since 1992 and was named our worst CEO of 2012. Over the past three years, Jeffries has been paid more than $107 million as the company’s stockholders have lost nearly 40% of the value of their investment. It could be past time for a change at the top.
Gap shares were up 6% in premarket trading Friday, at $40.02 in a 52-week range of $29.84 to $46.56.
A&F’s shares were inactive, having closed Thursday at $33.00 in a 52-week range of $30.74 to $55.23.
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.