Gap: 3 Different Insiders Have Sold Shares This Month

Mar.27.14 | About: The Gap, (GPS)

Summary

Three insiders sold Gap stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

Two of these three insiders decreased their holdings by more than 10%.

The Gap, Inc. (NYSE:GPS) operates as an apparel retail company worldwide. It offers apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, Athleta, and Intermix brands.

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Insider selling during the last 30 days

Here is a table of Gap's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Sabrina Simmons CFO March 12-19 110,987 Yes 113,233 shares + 90,000 options 35.3%
Mayo Shattuck Director March 12 2,000 No 71,401 shares 2.7%
Colin Funnell EVP March 12 12,500 No 55,243 shares + 25,000 options 13.5%
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There have been 125,487 shares sold by insiders during the last 30 days. Sabrina Simmons sold shares pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Gap's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
March 2014 125,487 0
February 2014 305,375 0
January 2014 0 0
December 2013 0 0
November 2013 6,806 0
October 2013 24,688 0
September 2013 207,353 0
August 2013 296,685 0
July 2013 57,618 0
June 2013 481,750 0
May 2013 1,893,490 0
April 2013 549,796 0
March 2013 700,435 0
February 2013 0 0
January 2013 0 0
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There have been 4,649,483 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Gap reported the fiscal 2013 full-year, which ended February 1, financial results on February 27 with the following highlights:

Revenue $16.1 billion
Net income $1.3 billion
Cash $1.5 billion
Debt $1.4 billion
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The three insiders sold their shares after these results.

Gap had a negative quarterly revenue growth year-over-year in the fourth quarter.

Outlook

Gap expects earnings per share to be in the range of $2.90 to $2.95 for fiscal year 2014.

Competition

Gap's competitors include Guess' Inc. (NYSE:GES), Abercrombie & Fitch Co. (NYSE:ANF), and Ralph Lauren Corporation (NYSE:RL). Here is a table comparing these companies.

Company GPS GES ANF RL
Market Cap: 17.76B 2.28B 2.88B 14.02B
Employees: N/A N/A N/A 14,000
Qtrly Rev Growth (yoy): -0.03 -0.06 -0.12 0.09
Revenue: 16.15B 2.57B 4.12B 7.23B
Gross Margin: 0.39 0.38 0.63 0.59
EBITDA: 2.62B 323.40M 454.65M 1.35B
Operating Margin: 0.13 0.09 0.05 0.15
Net Income: 1.28B 153.43M 54.63M 750.00M
EPS: 2.74 1.80 0.69 8.10
P/E: 14.54 15.04 54.67 19.32
PEG (5 yr expected): 1.04 4.45 0.88 2.34
P/S: 1.11 0.89 0.72 1.93
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Gap has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider activities this year.

Company Insider buying / shares Insider selling / shares
GES 0 1,000,000
ANF 20,000 64,704
RL 0 3,012,822
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Only Gap has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Gap, and there have not been any insiders buying Gap during the last 30 days. Two of these three insiders decreased their holdings by more than 10%. Gap has an insider ownership of 0.10%.

Before going short Gap, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are negative revenue growth, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.