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Gap (GPS) Gears Up for Holiday Season, Reveals Hiring Plan

Zacks Equity Research

Retailers are gearing up for the busiest season of the year. After Target Corporation TGT and The Michaels Companies, Inc. MIK, The Gap, Inc. GPS has laid out its plans to hire seasonal workers to provide a great shopping experience to customers during the holiday season. The company expects to hire 5,000 associates during a one-day hiring event to be held on Oct 5, 2019 across the United States and Canada. In this single day hiring event, it will pick eligible candidates for its Gap, Banana Republic, Athleta and Old Navy stores, as well as call centers and distribution centers, for the holiday period.

Seasonal employees will get perquisites like 50% discount on regular-priced merchandise at Gap, Banana Republic and Old Navy stores, 30% rebate at Outlet and Factory stores, while 25% off at Athleta stores.

However, analysts note that the company’s hiring plan is way below last year’s hiring of 65,000 seasonal employees. Per sources, the lower seasonal hiring this year is to give Gap’s current employees an opportunity to add more work hours and benefit from the perks provided.

Holiday season is a crucial time for retailers as it accounts for a sizeable chunk of yearly revenues and profits. Retailers try to attract customers with early-hour store openings, huge discounts and promotional strategies. However, concerns related to trade war, rising crude prices, sluggish business spending and other geopolitical issues are fueling apprehensions about an economic slowdown. In fact, imposition of tariffs has left some of the retailers with no other choice but to go for selective price increases, while trying not to hurt sales during the holiday season.

Nonetheless, keeping the concerns aside for a while and going by Deloitte’s recent holiday sales projection, retailers are all set to revel again in the euphoria of the upcoming festive season.

Holiday sales are projected to increase 4.5-5% and exceed $1.1 trillion between November 2019 and January 2020. Meanwhile, e-commerce sales are estimated to improve 14-18% to reach $144–149 billion. Numbers look robust compared with last year, when sales in December were affected by U.S. government shut down, battered stock market and increase in consumer savings.

Gap, which shares space with L Brands, Inc. LB, is enhancing its omni-channel capabilities including Buy Online Pick Up In Store, to enhance customer experiences. Also, the company’s efforts to boost digital offerings and improve product acceptance are encouraging. Banana Republic’s online subscription service, Style Passport, is expected to aid sales. However, persistent softness at Gap’s flagship brand due to lower traffic has been a hindrance for the stock.

So far this year, this Zacks Rank #3 (Hold) company has plunged approximately 34%, wider than the industry’s decline of 24.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Management expects the company’s plan to spin-off into two companies, to aid growth and improve operating efficiency. Additionally, the company has made significant progress with respect to its balanced growth strategy by enhancing omni-channel and digital capabilities as well as increasing operational efficiencies. Management expects the two companies to embed this balanced growth strategy and cater well to the challenging retail space.

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The Gap, Inc. (GPS) : Free Stock Analysis Report
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