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Gap To Decrease Domestic Stores By 34%!


Parsad
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You said it JSA.  I love this stock.  Not only do they generate $1bn in free cash flow per year, they use it almost exclusively to return cash to shareholders.  The dividend keeps going up and the share count goes down in giant steps.  Last year they took on over $2.5bn of debt and will use that cash to do more share buybacks (it's the only debt on the company).  Despite the negative same-store-sales headlines, ROE has gone up every year for the past 5 from 15% to almost 30%.  Now that's good capital allocation.

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The Gap will decrease their domestic stores by about 345, while expanding overseas and online.  Probably should have done so already.  Cheers!

 

They've also been decreasing square footage at existing stores for a couple of years.  The recent renovation at the Toronto Eaton Centre and Scarborough Town Centre in the GTA have shrunk the store sizes by about 25%.

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It will be interesting to see if Lampert tries to get GAP to open up some stores -- either Gap or Old Navy -- in some of the Sears stores within a store projects. 

 

I bet Ackman is thinking about doing the same thing with JCP, since they already have things like the Sephora store.  If I were GAP management, I'd run the numbers on opening up Old Navy in Sears, Gap in JCP, and keeping Banana Republics separate stores.

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