Which Specialty Retailers Can Make Money? Express, Inc. (EXPR), Gap Inc (GPS) and American Apparel Inc (APP)
New York, NY – GDP INSIDER – 04/20/2014.
This article discusses three companies: Express, Inc. (NYSE:EXPR), Gap Inc (NYSE:GPS) and American Apparel Inc (NYSEMKT:APP)
Express, Inc. (NYSE:EXPR) is a specialty retailer that was down in trading on Friday by 2.7% to $16.94 per share. It is up over 15% year to date and by 21% over the past 6 months due to an improving outlook in the retail sector. Consumer trends for spending patterns, increasing employment outlook in the United States, and low inflation are all positive for retail. Express had a good fourth quarter, and the new management team can continue to improve the brands position. Internal initiatives and positive industry development can drive the shares higher.
Gap Inc (NYSE:GPS) is up over 13% in the past six months but is actually down by 3.5% year to date. While it has benefitted from the positive trends in retail, it has underperformed the sector and the S&P 500. The S&P 500 is up by 13.6% in the past six months and up 1% YTD. The Gap continues to have issues with its namesake brand as well as with its position in the market. It has tried to adjust styles to better fit current trends at The Gap brand, but so far it has made little sustained traction. We expect it will underperform and could move lower.
American Apparel Inc (NYSEMKT:APP) was down by 2.9% in trading on Friday. Despite positive trends in retail, the company has run into issues. The stock price is down by 23% over the past three months and by 7% in the past six months. This somewhat dramatically underperforms the specialty retail sector and the overall market. The company has looming issues with the size of its debt. The management team is cutting costs, but this is also hurting revenue and EBITDA. American Apparel Inc faces ongoing challenges over the next few years and is a bankruptcy candidate.
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