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Public or private, the GAP has gaps

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Yesterday I visited a near by Gap store in 'up-scale' Santa Monica. When I walked in I was immediately disappointed by how down scale the store was. It was clean and bright and the sales people were helpful but there was little of interest to purchase and few customers too.

Actually, I was out for a lunch walk and the Gap store was on the way so I decided to see if they might have a nice simple shirt. As an architect and designer (dad was a tailor) I was wondering about their window displays before I entered. The Santa Monica store has seven large windows, each with mannequins wearing a reddish-mauve t-shirt with black jeans. The motif repeated in each window as if that was the only thing the Gap sold, or as if repeating the same thing over and over created something 'chic' or artistic -- I don't think so. It looked poor on product and ideas!

Since the crumpled, wrinkled, used, worn-out look is obviously in vogue you can be sure there was nothing for me. I can do that to my clothes by myself without anyone's help and without paying extra. Even notwithstanding my own personal taste, there were really very few products for sale, or variations on the theme even if one were looking for this type of wardrobe. I will not waste your time by enumerating the number of things that were not available that should have been, or could have been. I will simply point out that my impression was that this was a nice place with nice people and NO IDEAS and NO MERCHANDISE to choose from!

The women's section had more selection and the kids and baby offerings were only a little better.

I did end up buying some socks and a black shirt... the only one that was not making a social statement. Maybe because I'm involved in so many creative activities I do not need to make any anti-social rowdy political statements with my clothes. Or pretend I'm way cool or edgy because I emulate some 'gangsta' look. Perhaps I'm just too old.

The Gap Inc. (NYSE:GPS) closed yesterday at $19.17. How ironic that a company that seems to have lost its way has the symbol GPS (Global Positioning System). The Gap has the right stuff to come back, and maybe going private is the right path. It has an average P/E, and pays an average dividend yield of 1.67%. What might make it appealing is the low P/S of 1.13 and a fair price-to-book under 3 times. This, while still showing reasonable returns on equity, assets and invested capital according to data on AOL Money and Finance. If you believe that help is on the way it might be a bargain. I will look elsewhere for my investments and my clothes.

I think the company needs Warren Buffett to manage the business and Steve Jobs to manage the brand, but they are both probably too busy.

Check out my other posts for BloggingStocks here. Be sure to read You don't have to be 007 to find the best picks for 2007!

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.

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Last updated: November 26, 2009: 12:22 AM

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