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Gap Inc.

Gap Inc. The Valuation Project -Mod 3 : Market Multiples Sherry Xu ( netID : jxu6). Table of Contents. 1. Company profile 2. Market multiple valuation 2.1 B/S multiples 2.2 I/S multiples 2.3 Industry-specific multiples 2.4 Summary of market multiple valuation

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Gap Inc.

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  1. GapInc. TheValuationProject-Mod3:MarketMultiples SherryXu(netID:jxu6)

  2. Table of Contents • 1. Company profile • 2. Market multiple valuation • 2.1 B/S multiples • 2.2 I/S multiples • 2.3 Industry-specific multiples • 2.4 Summary ofmarket multiple valuation • 2.5Issuestobeconsideredinvaluationusingmultiples

  3. 1. Companyprofile Industry:Apparelstores Comparablecompanies:Abercrombie(ANF),AmericanEagle(AEO),Aeropostle(ARO) Global retailer offering apparel, accessories, and personal care products for men, women, children, and babies Foundedin1969inSanFrancisco;incorporatedinDelaware Brands:Gap, Old Navy, Banana Republic, Piperlime, Athleta, and Intermix #ofcompany-operatedstores: 3,095; # of franchise stores: 312 (As of FY2012 balance sheet date)

  4. 2.1 Valuation using B/S multiples • Fiscalyearendforallfourfirms:Feb.2,2013 • Shareprice:asofFeb.1, 2013(tradingdayclosesttocompanies’fiscalyearend)

  5. 2.1 Valuation using B/S multiples

  6. 2.2 Valuation using I/S multiples

  7. 2.2 Valuation using I/S multiples

  8. 2.3 Valuation using industry-specific multiples

  9. 2.3 Valuation using industry-specific multiples • Forretailindustry:Pricepersquarefoot

  10. 2.4 Summary of valuation using market multiples • Recommendation:BUY

  11. 2.5 Issues to be considered invaluation using multiples • Choiceofperformancemeasures • Nosinglemeasureentirelysummarizescurrentperiodperformance,muchlessprovidesasufficientbasisforforecastingfuturecompanyperformance. • Whichmeasuresaremorerelevant? • Choiceofcomparablecompanies • Gaphasmuchlargerscalethanthethreecomparablecompaniesinthevaluation. • Whichcompaniesaremorecomparable? • Combiningcomparablecompanydatatoproducemultiples • Average/weighted-average/median/averageexcludingthehi/lo.

  12. Questions?

  13. Thank you! Sherry Xu (netID: jxu6)

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