The Gap, Inc. stock is well-poised to tap the positive trends in the fashion arena, thanks to its robust strategic initiatives, including the Power Plan 2023 Strategy. Management is committed to creating a trend-right merchandise assortment, deepening relations with customers via marketing, enhancing the digital commerce agenda and efficiently controlling expenses. The company is gaining from brand strength and solid demand for its products that resonate well with customers.

Buoyed by such strengths, shares of this clothing and accessories retailer have soared 92.6% compared with the industry’s 42.4% growth in the past six months. The Zacks Consensus Estimate for GPS’ fiscal 2024 sales is pegged at $15 billion, indicating an increase of 1.1% year over year. This highlights analysts’ confidence in the stock.

Delving Deeper

Gap’s Power Plan 2023 Strategy focuses on opening highly profitable Old Navy and Athleta stores while closing the underperforming Gap and Banana Republic stores. It expects to leverage its powerful platform to deliver competitive omni capabilities to meet customers’ needs, fueled by its scaled operations. Through the plan, the company expects to deliver consistent sales growth, margin expansion and strong operating cash flow.

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Gap is aggressively undertaking cost-management actions. It has been simplifying and optimizing its operating model and structure, including increasing spans of control and decreasing management layers to improve the quality and speed of decision-making. It is also creating a consistent organizational structure across its brands. The company is focused on actioning more than $550 million in annualized cost savings and realizing margin expansion on lower air costs, improved discounting and effective sourcing strategies.

Gap is gaining from lower airfreight and improved promotional activity. This has been aiding the company’s margins and, in turn, the overall profitability. During third-quarter fiscal 2023, the gross margin expanded 390 basis points (bps) year over year on a reported basis and 260 bps on an adjusted basis. Merchandise margin increased 340 bps on 180 bps of leveraged commodity costs and lower air utilization and 160 bps of improved promotional activity from better inventory position and robust assortments.

Given all the positives, Gap stock seems to deserve a place in your investment portfolio. A Value Score of A further adds strength to this current Zacks Rank #1 (Strong Buy) company.

Other Stocks to Consider

We have highlighted three other top-ranked stocks, namely Abercrombie & Fitch (ANF Quick QuoteANF - Free Report) , American Eagle (AEO Quick QuoteAEO - Free Report) and Hibbett .

Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales implies growth of 3.8% from the year-ago reported figure. ANF delivered an earnings surprise of 60.5% in the last reported quarter.

American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 23% in the trailing four quarters.

The Zacks Consensus Estimate for American Eagle’s current financial-year sales indicates growth of 5% from the year-ago reported figure.

Hibbett, a key sporting goods retailer, currently carries a Zacks Rank #2 (Buy). HIBB delivered an earnings surprise of 24.2% in the trailing four quarters.

The Zacks Consensus Estimate for Hibbett’s current financial-year sales implies growth of 1.8% from the year-ago reported figure.