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Gap Inc.

Gap Inc. The Valuation Project -Mod 5 : EATO, EPM, &DCF Sherry Xu ( netID : jxu6). Table of Contents. 1. Company profile 2. Forecasts 2.1 Sales growth rate 2.2 EPM 2.3 EATO 2.4 Multi -year forecasts of sales, EPAT and NEA. 1 . Company p rofile. Industry : Apparel stores

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Gap Inc.

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  1. GapInc.

    TheValuationProject-Mod5:EATO, EPM, &DCF SherryXu(netID:jxu6)
  2. Table of Contents 1. Company profile 2. Forecasts 2.1 Salesgrowthrate 2.2 EPM 2.3 EATO 2.4 Multi-yearforecastsofsales,EPATandNEA
  3. 1. Companyprofile Industry:Apparelstores Global retailer offering apparel, accessories, and personal care products for men, women, children, and babies Comparablecompanies:Abercrombie(ANF),AmericanEagle(AEO),Aeropostle(ARO) 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 Sales growth rate FY2012: Strong growth IncreaseinsalesforbothNorthAmericaandnewinternationalstores. GrowthinonlinebusinessacrossallbrandsandsalesrelatedtonewAthletastores
  5. 2.1 Sales growth rate ANFandAEOhavehighergrowthratethanGPS Intensecompetition
  6. 2.1 Sales growth rate Average sales growth rate for GPS, adjusted: Downward for expectation of increased pressure from competitors, and Upward for expectation of improved economic conditions
  7. 2.2 EPM DecreasedEPMandEPMfromsalesduringFY2011 Slight reboundduringFY2012
  8. 2.2 EPM SimilartrendforANFandAEO
  9. 2.2 EPM Realized avg. EPM from sales for GPS: 7.41% Exp. EPM for GPS: 7.60% Average EPM from sales for GPS, adjusted: Upward for introduction of brands of higher price points, but Limited upward adjustment due to increased competition
  10. 2.3 EATO AslightincreaseinEATO
  11. 2.3 EATO SimilartrendforANFandAEO
  12. 2.3 EATO Realized avg. EATO for GPS: 4.02 Exp.EATOforGPS:4.10 Average EATO for GPS, adjusted: Slightly upward to match the upward trend in the industry
  13. 2.4 Multi-year forecasts of sales, EPAT and NEA Assumptions: Sales growth rate: 5.00% EPM: 7.60% EATO: 4.10 WACC: 10.7% (Bloomberg estimates)
  14. Questions?
  15. Thank you! Sherry Xu (netID: jxu6)
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