Analyst Calls Fire At Gap Distribution Center “A Fortuitous Reduction In Inventory”

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Ah, Gap: a company where a fire that destroys merchandise that the company would have a tough time selling due to its “unappealing” nature is seen as a good thing.

Shares of Gap Inc. had a one-day increase bigger than the company has seen since 2008 on Friday, Reuters reports, with a 14.9% boost to $26.16. That being said, the struggling retailer said comparable sales in September were down 3% compared to a 1% decrease during the same time period last year.

The company is blaming that drop on the ripples caused by a fire at one of its distribution centers in Fishkill, NY, which the company reported at the end of August. That location served as the company’s primary distribution center for the northeastern U.S.

Despite those disruptions, one analyst says it’s a good thing — now Gap doesn’t have to try to sell all that clothing that no one wants anyway.

“Given poor results at Gap and Banana Republic, likely attributable to unappealing merchandise assortments, we don’t view the product lost in the fire as an important loss but rather a fortuitous reduction in inventory,” Stifel analyst Richard wrote in a client note.

Shares of Gap on track for biggest gain since 2008 [Reuters]

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