Photo: Image: AP
It’s a busy morning already for Gap investors. Shares are already up more than 5 per cent in pre-market trading.The company said same store sales rose 5 per cent in December from a year ago, alleviating concerns that retail sales were especially weak this Christmas.
Growth figures nearly across the board were favourable compared to last year, per the release:
- Gap North America: positive 2 per cent versus negative 4 per cent last year
- Banana Republic North America: positive 1 per cent versus negative 2 per cent last year
- Old Navy North America: positive 13 per cent versus negative 4 per cent last year
- International: negative 6 per cent versus negative 6 per cent last year
Gap also announced another $1 billion share buyback. This follows the $1 billion buyback the company completed in the fourth quarter of 2012.
Finally, the company announced the acquisition of Intermix – an online high-end women’s clothing store – for $130 million in cash.
Below is more on the acquisition as detailed in the press release:
INTERMIX operates 32 boutiques across North America, along with an e-commerce site, offering a mix of luxury brands including up-and-coming designers for customers seeking elevated fashion. Gap Inc. sees an opportunity to expand INTERMIX’s unique network of stores, as well as add significant visibility and enhancements to its online site.
“INTERMIX has a distinctive position in this growing market with clear competitive advantage,” said Glenn Murphy, chairman and CEO of Gap Inc. “Their record of merchandising with a keen eye towards mixing multiple designer labels, complemented with exclusive product, is appealing to their loyal customers. This strategy reflects the strength of their brand vision and leadership team.”
This acquisition extends Gap Inc.’s portfolio of brands, building upon the success of the company’s acquisition of Athleta in 2008 and the multi-brand, premium product offering at Piperlime. With Gap Inc.’s guidance over the past four years, Athleta has grown from its origins as a catalogue business to expand through a strong e-commerce platform and brick and mortar presence, with about 35 retail stores opened in the past two years.
On balance, markets like the news.