Gap Inc. said it will close 230 Gap stores over the next two years. The closures will affect “specialty” Gap stores, which includes mall-based stores.
About 130 of those closures will happen this year. But the company also plans to open Old Navy and Athleta locations. Athleta, which will be part of the new Gap company, is a women’s athleisure chain that has been a success.
As of the end of last quarter, there were 1,242 Gap stores worldwide — 758 of them were in North America.
The holiday quarter wasn’t great for Gap Inc.
The company’s overall sales fell 3%, and profit fell 6%. Gap Inc. said profit was squeezed by bigger sales, coupons and other promotions than it normally provides customers.
Sales would have been even worse if it weren’t for Old Navy. Sales at the Gap fell 5% and sales at Banana Republic dropped 1%.
Old Navy is Gap Inc.’s best-performing brand.
Last quarter’s sales at stores open at least a year:
2018’s sales at stores open at least a year:
Sales were slower across the board for all of Gap Inc.’s brands last quarter and last year. But Old Navy was the only business that grew in 2018.
Old Navy
— >> $8 billion in annual revenue
— >> Sonia Syngal, Old Navy’s current CEO, will lead the company
NewCo (real name TBD)
— >> $9 billion in annual revenue
— >> Art Peck, Gap’s current CEO, will lead the company
Gap (GPS) made a major announcement this afternoon: It plans to separate Old Navy from Gap, Banana Republic and Athleta and create two publicly traded companies.
Robert Fisher, Gap’s board chairman said:
Gap stock was up more than 20% in after hours trading. The spinoff is expected to be completed in 2020.
CNN Business’ Nathaniel Meyersohn wrote this about the company in November:
The Dow fell 69 points, or 0.3%. The S&P 500 was down 0.3%, while the Nasdaq also declined 0.3%.
But all three indexes finished February higher. The Dow increased 3.7%. The S&P 500 finished up 3%, and the Nasdaq ended up 3.4%.
JCPenney (JCP) surged 23% on Thursday to $1.52 after the retailer reported that the holidays weren’t as bad as some expected. That’s good news for the struggling company.
HP (HPQ), meanwhile, sunk 17% after the company’s earnings disappointed.
Booking (BKNG) Holdings fell 11% on fears of a travel slowdown in Europe.
Tesla (TSLA), the electric car maker, finished up nearly 2% ahead of a mysterious announcement. CEO Elon Musk caused a stir when he teased the news Wednesday.
Two weeks after killing a deal to build a new campus in New York City, Amazon is expressing lots of love for the company’s remaining second headquarters site – Arlington, Virginia.
“We want to locate in a community where not only our company but our employees are welcome, and we feel that in Arlington,” said Amazon’s worldwide head of economic development, Holly Sullivan, speaking before a crowd of local real estate types at an event sponsored by the news website Bisnow.
Sullivan said the company sent a representative around to bars and coffeeshops while they were vetting sites in Crystal City, the dull collection of office buildings just across the river from Washington, DC, chatting up residents to see what they thought of Amazon coming to the area.
In contrast, Amazon had faced fierce opposition from local politicians in Queens as well as some activist groups, although polls showed that the majority of New York residents supported their plan to put 25,000 workers in Long Island City.
“We think we could’ve gotten New York done, but you always have to say, what are the costs?” Sullivan said. “We think we made a very prudent decision that gives us an opportunity to hyper-focus on Virginia.”
The path to getting a nearly $3 billion package of tax incentives negotiated in New York by Gov. Andrew Cuomo and New York Mayor Bill de Blasio had been complicated by a shift in power in New York’s state senate. In Virginia, however, the $750 million incentive package sailed through the legislature and was signed by Democratic Gov. Ralph Northam in early February.
Yet a handful of protesters interrupted Thursday’s event for several minutes, chanting a demand for public hearings on the Amazon deal. They were met with boos from the sold-out audience, before being shepherded out.
New York officials, while mourning Amazon’s decision to scratch plans for New York, have also said that Amazon’s public relations strategy was partly to blame for local opposition, along with “misinformation” about the nature of tax incentives.
“I think they were not prepared in the way they reacted,” said New York City Economic Development Corporation director James Patchett in a speech hosted by Crain’s New York Business last week. “They didn’t perform particularly well during their public hearings. They never hired a single New Yorker. They never really connected with people in the city.”
Amazon only informed officials that it had chosen Long Island City 24 hours before planning to make a public announcement, Patchett said, which left them scrambling to organize the rollout.
From JCPenney (JCP) to L Brands (LB), this week’s retail earnings have been a wild ride for investors.
“Volatility is another word for retail,” Simeon Siegel, an analyst at Nomura Instinet, told First Move anchor Julia Chatterley.
He said after a relatively positive holiday season, retailers now might be carrying too much inventory, which could lead to discounting and deep promotions. Some also plan to close more stores. JCPenney said it will close 18 stores this year, while Victoria’s Secret plans to shut 53.
“The US consumer is healthy, but retailers are in tough spot,” Siegal said.
Shares of Booking Holdings, which owns Priceline, Kayak and Booking.com, are down 9% at midday after the company said it expects growth in hotel bookings to slow this quarter. The online travel agency reported higher than expected earnings but said customers are growing more hesitant to travel to Europe, Booking’s biggest market, as Brexit looms.
Bookings’ (BKNG) hotel reservation numbers declined last quarter, and analysts said they don’t see European travel picking up anytime soon.
Expedia (EXPE) and TripAdvisor (TRIP) both dropped after Bookings expressed concern about the European market, sliding 3% and 1% respectively.
Stocks are pretty quiet at midday. Here’s where they stand:
Here are a few stocks to watch:
Shares of Keurig Dr Pepper (KDP) fell about 6% midday Thursday after the company’s full year sales and profit forecast missed expectations.
The coffee and soft drink company said it is expecting 2% growth in net sales this year.
CEO Robert Gamgort warned of “an increasingly challenging operating environment” because of inflation during a call discussing full year and fourth-quarter 2018 earnings results.
In 2018, the company’s net sales increased 76% to $7.44 billion, reflecting the completion of the merger between Keurig and Dr Pepper in July. For the year, sales of Keurig coffee machines dipped slightly, though sales of K-cup coffee pods increased about 7.4% by volume.
The US economy grew at an annualized rate of 2.6% in the fourth quarter of 2018:
The Dow was essentially flat at market open. The S&P 500 drifted 0.1%, lower while the Nasdaq slipped 0.2%.
US GDP numbers for the fourth quarter looked better than expected. The broad measure of the nation’s economy grew slower than the previous quarter, but the slowdown wasn’t as bad as what economists feared.
Shares in AB InBev (BUD) grew 4% after the world’s biggest brewer said it expects strong sales in 2019.
JCPenney (JCP) stock soared 27% to $1.57 after the retailer reported that its holiday stretch wasn’t as bad as some feared — an encouraging sign for the troubled retailer.
L Brands (LB) fell 6%. The Victoria’s Secret owner said its lingerie store struggled to draw customers during the holidays.
Fitbit (FIT) shares are tanking in early trading — down more than 15%.
Finally, some good news for Southwest Airlines (LUV): The low-cost carrier has received the Federal Aviation Administration’s approval to start flights to Hawaii.
The airline needed the agency to approve its Boeing 737-800 planes to fly long distances over water. Last month’s partial government shutdown delayed the FAA’s decision.
Southwest has been testing flights from California to Hawaii since earlier this month.
Southwest said in a statement that it is “now finalizing our plans to offer service to Hawaii, and we’ll publicly announce our timing for inaugural flights and other service when we publish our schedule in the coming days.”
Shares are up nearly 5%.
Square’s (SQ) stock is cratering. The payment company’s shares are down nearly 7% after releasing a mixed earnings report.
Shares in AB InBev (BUD) gained 5% after the world’s biggest brewer said it expects strong sales in 2019 and touted the success of its premium products.
The brewer of Budweiser and Corona said that its sales increased 4.8% during 2018. One major growth area is non-alcoholic and low-alcohol drinks, which made up 8% of the company’s global beer volumes in 2018.
“We continued to increase our focus on this opportunity, leveraging global health and wellness trends and in line with our commitment to smart drinking,” AB InBev said in a statement.
Rival brewer Heineken (HEINY) said earlier this month that the popularity of its non-alcoholic beer Heineken 0.0 was also rising.
Ab InBev said it had performed particularly well last year in Mexico, China, western Europe, Colombia and Nigeria. It said premium drinks helped drive its performance in the US.
We’re finally about to find out how the economy did at the end of 2018, and the picture looks increasingly gloomy.
The Bureau of Economic Analysis postponed the release of GDP figures for the fourth quarter because of the government shutdown.
It also delayed indicators that will feed into the report — such as retail sales, capital spending and residential construction — which all point toward a mounting slowdown through the holidays.
As usual, forecasters disagree about where the number will end up, but nobody thinks that last year’s blazing pace sustained itself through the end of 2018. For example:
Global stock markets have dipped as investors react to negative economic data in Asia and the abrupt end of a summit between the United States and North Korea.
US stock futures are pointing lower. European markets opened down and most indexes in Asia closed with losses.
Official Chinese data showed the country’s manufacturing sector weakened again in February, raising concerns about the slowdown in the world’s second largest economy.
The collapse of nuclear talks between President Donald Trump and North Korean leader Kim Jong Un also contributed to the sour mood among investors, especially in South Korea. South Korea’s benchmark Kospi index closed down 1.8%.
Some investors had bet that improved relations between North Korea and the rest of the world would mean new business for regional infrastructure and mining companies. That now looks less likely.
