Gap SWOT & PESTLE Analysis
COMPANY PROFILE -Gap
Business Sector :Fashion and Apparel products
Operating Geography :United States, North America, Global
About Gap :
Gap Inc is one of the leading Global retailers which offers clothing, accessories and personal care products for men and women of all age groups, as well as children. The company is headquartered in San Francisco, California and its major business comes from the United States where it was founded. When the company was founded in 1969 by the couple Donald Fisher and Doris Fisher, it was a franchise exclusively for Levi's jeans. The company slowly expanded to venturing with its own brands with the name of the company itself. As the company grew it expanded by acquiring different brands, like Old Navy and Banana Republic, which were relevant to its business. The fisher family still holds a significant portion of the company and four members of the family are on the board of directors of the company.The Gap had become a household name in the US, but since the past few years the company shares have gone down remarkably. The major reason being quoted for the poor performance in the recent past has been the outdated fashion of its brands particularly the gap and Banana Republic. However, with change of management in the year 2020, the company is expected to bounce back to its original glory. Gap has approx. 129,000 employees as of February 2020.
Gap Revenue :
US$ 16,383 million – FY ended February 1, 2020 (y-o-y growth negative 1%)
US$ 16,580 million – FY ended February 2, 2019
Competitive Analysis of Gap
| 1. Portfolio of distinct set of strong brands 2. Long-standing vendor relationships which help scale operations 3. Leading omni-channel capabilities 4. Well positioned to take charge post pandemic crisis | 1. Health and profitability of Gap and Banana Republic brands 2. Large amount of low-quality debt 3. Failure of Gap and Banana Republic brands to shift online amid store closures due to pandemic 4. Continuous discounts diluting the perceived value of the brand |
| 1. Increasing popularity for rental subscription services 2. Growing potential activewear and athleisure segment 3. Opportunities in Asia Pacific market | 1. Struggling fast fashion segment 2. Mounting inventory levels due to economic slowdown amidst pandemic 3. US apparel industry most affected among retail |
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Detailed SWOT Analysis of Gap
Strength
This section is available only in the 'Complete Report' on purchase.
Weakness
1. Health and profitability of Gap and Banana Republic brands: The Gap and Banana Republic, which are the flagship brands of the company, have been consistently performing poorly for the past few years. Brands have recorded negative comparable sales since 2017. The Gap’s comparable sales reduced by 1% in 2017, 5% in 2018 and 7% in 2019. Similarly, Banana Republic recorded a negative growth of 2% in sales in comparable in the year 2017 and 2019. Both these brands were the major contributors in the overall decline of The Gap, Inc.’s comparable sales 3%, as well as a decrease of 1% in net sales. The major reason being cited for the poor performance of these brands is that these brands have become outdated and unable to keep up with the new trends in fashion. Customers don't seem to be attracted to the look of the stores and which makes them even less likely to make a purchase. This is especially the case with the Gap and some consultants are even suggesting to close its namesake stores and transit to an online only retailer brand.
2. Large amount of low-quality debt: Moody’s and S&P Global both have downgraded Gap’s credit risk rating BB- and Ba1 respectively. This especially happened after the company took a loan of $ 2.3 billion, after which the rating agencies placed the company in the speculative, or junk category. Although the company's debt-equity ratio is 0.37 it has a lot of other liability items in its balance sheet which downgrade the credit risk of the company. A lower credit rating means higher risk for the company, which means that financial institutions would be very off landing to the company. It also means that whatever earnings that the company the cruise right now would be used to playback the existing loans rather than invest in capital assets. The downgrading of the company's credit risk also means that the loan that the company has taken is speed utilized for low-return investments.
The remaining section of “Weakness” is available only in the 'Complete Report' on purchase.
Opportunity
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Threat
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Major Brands :
- Old Navy
- GAP
- Banana Republic
- Athleta
- Intermix
- Hill City
- Janie and Jack
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Gap Analysis Report
1. Gap annual report 2019 - http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GPS_2019.pdf
2. Gap annual report 2018 - http://www.annualreports.com/HostedData/AnnualReportArchive/g/NYSE_GPS_2018.pdf
3. Gap company profile - https://www.reuters.com/companies/GPS
4. Gap CSR report 2017 - https://www.gapincsustainability.com/sites/default/files/Gap%20Inc.%202017%20Report.pdf
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Gap SWOT & PESTLE Analysis - SWOT & PESTLE.COM
SWOT & PESTLE.com (2020). Gap SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/gap/ [Accessed 27 Oct, 2020].
In-text: (SWOT & PESTLE.com, 2020)
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Gap SWOT and PESTLE analysis has been conducted by Divyansh Kharadkarand reviewed by senior analysts from Barakaat Consulting.
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