Friday, August 21, 2009

Gap - Acquisition Trail or Will it be Someones Snack

Gap Inc (GPS) reports some very good numbers in tough times. They truly have a respectable bottom line, improved margins and substantial cash and liquidity. Glenn Murphy, chairman and chief executive officer actually said

Building upon two years of work improving our economic model, we’re now putting further emphasis on changing the trajectory of our top line performance. Our focus is to find the right balance between maintaining our cost discipline and making appropriate, targeted investments to gain back market share.”

Here is the crux of the question. They are undoubtedly well positioned. Will it be organic growth? Or will they make some strategic acquisitions. Lots of situations are ripe for a deal. Will Gap acquire something or be acquired by someone?

Management needs to start drawing some lines in the sand.