Dueling Fools
July 22, 1998
A Gap Between Us
Gap Price (7/21/98): $61 3/8
Duel thirsty Fool, you have fallen into the Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>. Last week Mickey Drexler was on the cover of Fortune. Not People. Not Vogue. Fortune. A fitting name for a publication for Drexler to grace since Gap ownership has led to quite a few fortunes being made for long-term investors.
From the namesake stores to Old Navy and Banana Republic, the company has been able to grow profits while never losing consumer fancy -- a rarity indeed in the mall world. Everybody loves the Gap. Right?
Wrong. This week Yi-Hsin Chang (TMF Puck) and Louis Corrigan (TMF Seymor) are Dueling Fools. Yi-Hsin sees denim-blue skies for the company while Louis thinks khaki is wacky. The retailer rumble is about to begin and this one's bound to fit just right.
You Get to Vote!
Once you've read the arguments and the rebuttals, it's your time to cast your vote. We'll tabulate results each week and revisit them from time to time to see whether you were right! As always, we invite you to join us in the Dueling Fools Message board to continue the duel.
[Any suggestions, comments, praise, or flames, please send them along to the Dueling Fools Team.]
| The
Bull... Different investors have different criteria for picking stocks. Some look first at a stock's historical price performance. Others pore over spreadsheets to evaluate a company's record of revenue and earnings growth. Then there are others who are drawn simply by a great story, a great name that instantly gives them a good gut feeling that they've got a winner. Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> is a company that measures up no matter which way you look at it. Frankly, I have no idea how Louis, my worthy adversary and fellow alumnus, plans to make an argument against this great company. Continue... |
The
Bear... I love the Gap. I would love to fall right into it. In fact, if I had bothered to learn anything from Peter Lynch, I would be a happy Gap owner today. I'm frankly embarrassed that I'm not.
The percent of my wardrobe purchased from Gap-owned stores seems well into triple digits, if that's possible. While Old Navy is cannibalizing a bit of my Gap shopping for basics like T-shirts and jeans, I find I spend twice as much there than at the flagship store because everything seems so inexpensive. And for reasons I haven't been able to pinpoint, most of my marginal purchases that once went to J. Crew or Abercrombie & Fitch or Structure have found their way to Gap stores. Power of branding? Maybe. But the brilliant rollout of Old Navy has created a value pyramid for Gap that should continue to pay off. |
Results for last week's Compaq Duel
| Answer | Percentage |
| I can't make up my mind | 4% |
| TMF RFK's Bull argument | 62% |
| TMF Seymor's Bear argument | 21% |
| They were both excellent | 10% |
| They were both lame | 3% |