Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.
Gap’s Difficult Decade
One of the market laggards of the past decade was mall retailer Gap Inc (NYSE: GPS).
The 2010s were a transformative decade for the retail sector. Gap and other department stores were forced to invest heavily in an aggressive transition to online sales to keep pace with e-commerce leader Amazon.com, Inc. (NASDAQ: AMZN).
Unfortunately for Gap investors, the company finished the 2010s taking the same approach as it started the decade--trying to shrink its way to success. In 2011, Gap announced it would be closing 189 stores as part of a cost-cutting and restructuring initiative. As sales continued to decline, Gap tried to grow via acquisition, buying up designer clothing company Intermix in 2013 and children’s clothing company Janie & Jack in 2019.
Still, heading into 2020, Gap is still closing stores. In 2019, it reduced its net total footprint by about 30 stores. It also announced in 2019 it plans to spin-off its Old Navy brand, its fastest-growing brand.
Gap shares started the 2010s trading at around $20. Following the store closure announcement in 2011, Gap shares hit their low point of the 2010s, dipping to $15.08. The next several years were a huge success for Gap investors. The stock marched steadily higher with few interruptions, eventually peaking at $46.95 in mid-2015. Unfortunately, that level would mark the highest point of the decade for Gap.
The stock began to plummet as rising costs and slowing sales growth compressed margins and ate into profits. Gap traded back down to as low as $15.11 in mid-2019.
2020 And Beyond
After a lackluster 2010s, the 2020s are off to a disastrous start for Gap. The stock recently broke below its 2011 lows to make new lows, dropping below $13 heading into its fourth-quarter earnings report.
There’s no question Gap has been a horrible investment over the past decade. In fact, $100 worth of Gap stock in 2010 would be worth about $80 today, assuming reinvested dividends.
Looking ahead, analysts expect Gap to rebound from its recent sell-off in 2020. The average price target among the 20 analysts covering the stock is $17.50, suggesting 31% upside from current levels.