GPS: Gap Doing Something Right???

It’s rare that Gap, Inc gives me an opportunity to pat it on the back for anything, but its deal to buy Athleta for $150mm (about 1.5x sales) makes a ton of sense to me.
  • We’re talking a rounding error to Gap’s P&L and balance sheet – Athleta is only 0.6% of sales – but from a fragmentation standpoint this is the way to go. Aside from certain high-end apparel categories, the athletic space is the only growing category that consistently grows, and the fruits are largely shared by fewer than a dozen brands (Nike, Adidas, UnderArmour, Lulu, Lucy, Champion, Juicy, Reebok, Asics, and Russell). Gap’s core brands, on the flip side, compete with virtually everyone. Not good.
  • This actually gets Gap into a category where it can add some value. In fact, I wouldn’t be surprised if we’re sitting here 3 years out and Gap has grown this into a $300-$400mm brand.
  • Unfortunately for Gap, that’s still a rounding error to its P&L – especially given the margin pressure it has yet to see in its core.
  • Also, I can’t reiterate enough how ridiculous of an idea it is to drive an e-commerce strategy with ALL of Gap’s concepts as part of one customer experience. If I were running Banana Republic, this would take my blood pressure up big time to see customers meshing my assortments with that of Old Navy.
Gap finally getting into a segment of the market that actually grows.
4 (now 5) brands on 1 site... I don't buy it. Crossing over brands marketed to different consumers is a bad deal.

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more