Gap Digs Out of a Fiscal Hole Term Paper

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GAP Digs out of a Fiscal Hole and Expands

GAP Leadership Re-configuration

Fiscally, things have been going quite well for GAP INC., in particular since a new CEO - Paul Pressler - showed up to take the GAP reins in September of 2002. "Sales...are back on the upswing..." And earnings have also "resumed their upward trajectory" (Karr, 2004). What is even better for investors / shareholders is that as of February 2004, the price of a GAP stock has "doubled Karr reports. Still, GAP is saddled with about $2.8 billion in debt, according to the article in Daily News Record.

Notwithstanding that debt, GAP "could find itself able to renegotiate its credit agreement" - and hence, "shed itself of current restrictions" on dividends and stock purchases, which could result in savings.

There is additional positive corporate news from GAP (WWD, 2004); to wit, Jorge Montoya - who is 57 and has gained a wealth of experience serving Procter & Gamble as head of their Latin American global snacks and beverage division - has been appointed to the GAP board of directors.

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He replaces Charles Schwab (of The Charles Schwab Corp.), who served GAP for 18 years, but stepped down due to time constraints.

GAP Acquisition / Diversification

Meanwhile, GAP is reported to be seeing a "growth vehicle" (Molin, et al., 2004) in the form of a new division - targeting the "cheap and chic styles" of Hennes & Mauritz) - allowing GAP to diversify beyond its present pricy, upscale collection. This would put GAP in a position to compete with hugely successful stores like Target, Wal-Mart, and other retailers whose fashions include name brands but whose prices are lower.

Also, according to an article in just-style.com, GAP is not standing still in developing its foreign markets; indeed, GAP will be opening three new stores in Japan by the end of 2004 - in Takasaki, Asahikawa, and Kisogawa. - and in addition, GAP's "Baby GAP" will open its doors in Isetan, Japan, this summer. When these three stores are fully functional, it will mean GAP has….....

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