Citi Upgrades Gap Because colourful Pants Are Back In Style

gap

Who needs Vogue when you can get fashion tips from Citi?

The bank upgraded Gap to buy from neutral citing a hot spring assortment among other reasons:

The Gap division has struggled with assortment issues particularly in the women’s business over the past several years. Bottoms, including denim, have performed better than top’s which remain the area of focus. We are forecasting a (3%) comp in 1Q and (2%) in 2Q. Our assumptions remain conservative though our early spring checks suggest the “colour” trend at the mall could be beneficial to the division specifically with the brand’s coloured denim offering.

Analyst Jeff Black also said a shift in Gap’s sourcing strategy from specific vendors to regional hubs—denim from Hong Kong and knits from Korea—would bring down the cost of goods.

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