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Gap, Inc.

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by

Megan Heiser

on 27 February 2013

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Transcript of Gap, Inc.

Strengths Weak consumer spending in Europe and U.S. Threats Opportunities Dependence on outside vendors Weaknesses Five-Forces Model •Doris and Don Fisher

•Millard "Mickey" Drexler

•Paul Pressler

•Glenn Murphy Company History SWOT Analysis Megan Heiser, Rebecca McCracken, Libby Hall Gap, Inc. Growing market for plus size clothing Global Recognition Threat of new entrants Rivalry among retailers Competition from substitute products Bargaining power of suppliers Bargaining power of buyers Price
Quality
Style
Location Stagnant industry sales
Established competitors
Brand loyalty
Capital requirements The Gap's Strategy Department stores
Mass merchandise stores
Second-hand stores
Thrift shops
Hand-me-downs Trade Restrictions Low switching costs
Declining demand
Weak differentiated selections 10-20% of
industry revenue Financial Performance Less attractive in trendy clothing Quality Issues Expanding presence in key growth markets Growing market for counterfeit products Variety in brands, price points, and value Franchising Net Sales Cost of Goods Sold Gross Profit Overall Financial Situation Earnings per share has increased from 1.24 in 2005 to 2.05 in 2011 Net Income decreased from 2005 in 1113 to 778 in 2008 Net income worked its way back up to being 1204 in 2010. However, it decreased to 833 in 2011. This is because of a decrease in sales but an increase in COGS. Recommendations Consistent CEO and strategy Redefine themselves in the market Develop new product lines Create an online focus Bring in designers to keep up with trends Decrease reliance on suppliers Increase sales World Trade Organization

Multi-Fiber Agreement (1974-2005)

China's minimum wage increases;
outsourced to Philippines, Vietnam, Indonesia, India, Cambodia "Make it simple to find a pair of jeans" Paul Pressler - 2002 Glenn Murphy - 2007 Mickey Drexel - 2000 Long-term decline in sales
Drexel replaced in 2002 Redesigned website, New York Times raves
Expanded brands, mixed reviews
Focused on reducing debt ($2.9 billion)
Increased dividends to shareholders
CEO cut too much, hurting the business
Lacked interesting new product lines 20+ years of retail experience
Improved appeal of product lines
Expanded internationally
Acquired Athleta (2008) for $150 million
Brought in new design chief
No longer on the "trend treadmill"
Wall Street: "Gap is in the right direction"
Full transcript