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Analysts Give Gap High Marks

Wall Street analysts gave Gap Inc. high marks on its steps to re-ignite its business after meeting with top management Thursday. And while the current consumer spending slump is a big challenge, investors believe that Gap will be well-positioned to take advantage of a thinned-out retail landscape once the economy rebounds.

The meeting, which was held at its San Francisco headquarters and featured addresses by top executives, including Chief Executive Glenn Murphy, offered more details about how the retailer is taking steps to fix its business and generate traffic.

Much of the overhaul focuses on its lagging Old Navy chain, which accounts for more than 40 percent of overall revenue. Gap reiterated its fiscal year profit outlook, but executives acknowledged economic challenges heading into the holiday season. The outlook does assume that the severe stock market volatility would subside in coming months.

Gap also reiterated plans to eliminate 10 percent to 15 percent of its real estate holdings by creating smaller stores and closing units over the next three to five years. The smaller stores would carry the same breadth and assortment of merchandise, thereby increasing the productivity of the store.

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