After experiencing a lackluster 2020, Gap Inc is now riding the wave of a comeback with its stock surging to a three-year high.
In a rapidly changing retail landscape, with both offline and online establishments suffering the consequences of the worldwide pandemic, Gap Inc is mitigating risk and is pushing ahead of its competitors.
The company’s “Omni-Channel” strategy allowed it to rapidly pivot and become markedly more digital-commerce oriented. To cope with the competition, the company is placing more focus on consumers’ “digital-first” experience by developing an app and placing more emphasis on online promotions and campaigns.
Beyond its digital focus, Gap Inc is still finding success via classic stores, investing 600 million in strategic store remodeling projects last year. By increasing customer experience and website usability with their app, acquiring unique brands such as Athleta, and rapidly shifting to online, Gap Inc is appearing to defy gravity.
Investors should be joining in on Gap Inc’s current momentum. With cash and marketable securities that comprise roughly 25% of its current market capitalization according to GuruFocus, Gap Inc looks to be in an excellent starting position.
Moreover, not only can investors seize the gap in the market, but they can also benefit from Gap Inc’s commitment to its shareholders. The company has been dividend paying since 2004 and in 2020, it even increased the dividend by 10%, quite an impressive feat in the subdued economy.
Despite the clear potential, investors must tread carefully as there are some things to consider. Gap Inc is facing increased competition. While smaller brands exclusively catering to online customers such as MSCHF, or even the existential threat of Amazon, are among those Gap Inc must contend with.
That being said, with a company as adaptable and progressive as Gap Inc, investors need not worry about being overcome by the competition. Gap Inc has what it takes to sustain its current momentum and Gap stock’s current potential should not be ignored.