Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Gap's Crucial Christmas [Wall Street Journal]
Summary: Two years into its turnaround, Gap Inc. is still struggling. YOY net income hasn't risen since 2Q05. Monthly same store sales have increased only three times in the last two years. Despite a new AIDS charity ad campaign and a high end shoe website, Gap's CEO Paul Pressler has yet to produce significant results for the company. Banana Republic is the one positive on the balance sheet; the store increased its same-store sales every month over the last quarter in addition to maintaining healthy profit margins. Analysts consider this a make-or-break holiday season for Gap and its CEO. An executive shake-up might be necessary if this turns out to be another lackluster Christmas. The company might also be a buyout candidate. Gap shares hit a 52-week high of $21.09 on Oct. 30. They closed on Friday at $19.30, a decrease of 8%.
Related links: Media coverage: Reuters . Commentary: LBO Fever • Gap's Employee Productivity Lags Behind Its Peers • Gap Sales Slide for 9th Straight Quarter. Conference call transcripts:Gap Q3 2006 .
Potentially impacted stocks and ETFs: Gap Inc. (NYSE:GPS) • Competitors: Wal-Mart Stores Inc. (NYSE:WMT), Hot Topic Inc. (NASDAQ:HOTT), Abercrombie & Fitch Co. (NYSE:ANF), American Eagle Outfitters Inc. (AEOS), Pacific Sunwear of California Inc. (NASDAQ:PSUN) • ETFs: PowerShares Dynamic Retail (NYSEARCA:PMR), ST SPDR RETAIL ETF (NYSEARCA:XRT), iShares Dow Jones US Consumer Goods ETF (NYSEARCA:IYK)
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