The Gap, Inc. SWOT Analysis
Strong Liquidity Position
During the 2010 fiscal year, The Gap, Inc. saw an increase in cash inflow from operating activities of 36.4%, according to GlobalData. Increasing cash and cash equivalent represents the company’s ability to fund its business opportunities, working capital needs, meet shortterm obligations and other capital requirements in the future. GAP is superior competitors. According to DataMonitor, 2011, the company’s net profit margin (8.2%) for FY2011 was nearly double when compared to the net profit margins of AnnTaylor Stores (3.7%) and American Eagle Outfitters (4.7%), two of its competitors (GlobalData). On February 23, 2012, Gap, Inc. reported an increase in earnings per share, after it bought back 111 million shares in 2001 for a total of $2.1 billion. The purchase of stocks led to an annual increase of close to 50 cents per share. Although the increase in price per share is down from the same quarter in 2010, According to Forbes, that figure still exceeded Zacks Consensus Estimate by two cents. Despite net sales being down two percent in same comparison, those sales are still in line with Zacks Consensus Estimate. According to Forbes, the decrease was due to a four percent decline in samestore sales. Gap, Inc. also reported a thirtyseven percent drop in operating income is merely a reflection of their recent decline in operating expenses (Forbes).
Strong portfolio / brand recognition
Gap, Inc. provides a wide range of apparel for men, women, and children of all age groups. Gap’s brand name is most important asset Gap, Old Navy, GapKids, BabyGap, Gapbody, GapMaternity, Intermix, Banana Republic, Athleta, and Piperlime Gap, Inc.). Supplier power
Key suppliers in the apparel market are clothing manufacturers and wholesalers, with retailers able to source from both. Gap, Inc. acts as both a manufacturer and a retailer by using privatelabels which provide a manufacturer with increased revenues and the ability to reduce perunit costs, thus increasing supplier power (MarketLine). Wide geographic presence
Over 200 franchise stores found across 33 countries, primarily North America, Europe and Asia
(Forbes). Global presence enables the company to build its brand image and maintain its strong position in the market. Franchised stores located in Bahrain, Indonesia. Kuwait, Malaysia, the Phillipines, the Oman, Qatar, The Kingdom of Saudia Arabia, Singapore, South Korea, Turkey, the United Arab Emirates, Greece, Romania, Bulgaria, Cyprus, and Croatia. Franchising allows Gap, Inc. to grow global revenues and market share (GlobalData). Directtocustomer segment
All products offered by Gap, Inc. through physical retail stores across the world are also available for online purchase as well as some extended sizes not commonly found in physical retail stores. Piperlime is an onlineonly store which offers customers a variety of stylish apparel and accessories as well as tips and trends and other advice from leading style authorities (MarketLine). Celebrity stylist Rachel Zoe can be found on Piperlime.com, where she shares her picks on her favorite fashions from the site (Gap, Inc.). Weaknesses
Gap, Inc is commonly targeted within worker safety debate After a recent factory building collapsed in Bangladesh, Noel Beasley, President of the SEIU affiliate Workers United told ABC News his Union’s protests may expand beyond Gap to other Major retailers, but said that Gap has become a focal point because the company “has trumpeted itself” as a leader on social responsibility (Mosk and Ross). Gap, Inc. relies on thirdparty agents, with most of their merchandise being manufactured overseas (mainly in China). Gap is unable to oversee the conditions and manner in which items are made, which has led to quality issues in their clothing. While some labor rights groups estimate repair costs of factories in Bangladesh to reach as...