"When people go to stores in December, they'll start seeing the beginning of some changes to the business, when it comes to its aesthetic and quality of the product," he said on a conference call with Wall Street last week. "Between the product improving at Gap, and a global marketing platform that I think we can stand behind, I'm feeling better about 2012 when it comes to Gap."
In October, Gap said it will shutter nearly 200 namesake stores, bringing its Gap brand store base to about 700 in North America by 2013. Overall, the company plans to reduce its square footage in the U.S. by 10 percent in the next two years.
3. While Wal-Mart finally reported positive U.S. same-store sales in the third quarter after nine consecutive periods of declines, the majority of the boost came from 4 percent food inflation . Wal-Mart's grocery division was trending up, but its other categories like apparel and home goods were still in negative territory.
The discount giant is looking to regain its status as the everyday low-price leader and recapture shoppers it lost due to some of its own internal blunders.
Wal-Mart's third-quarter results last week prove it is committed to investing in pricing and it has been working aggressively to restock hundreds of thousands of items it removed from shelves under its "Project Impact" initiative.
"We believe the combination of stepped-up marketing, longer hours, intensified pricing efforts and a re-launch layaway program, coupled with easy year-ago comparisons (negative 1.8% U.S. same-store sales) should drive better Black Friday performance at the expense of others," Goldman Sachs analyst Adrianne Shapira wrote in a note.
But Wal-Mart's focus on lower prices is coming at the cost of the bottom line, as Wal-Mart's third-quarter profit slipped nearly 3 percent to $3.34 billion and its gross margin narrowed to 24.6 percent.
"While Wal-Mart's improving sales momentum should power better Black Friday sales, we expect it to come at the expense of profitability," Shapira wrote. "Much like in the third quarter, we believe the flow through to be increasingly challenged as the cost of doing business is going up. We continue to expect gross margin compression and steeper investments, especially in e-commerce, to challenge their ability to deliver a better bottom line. This should not only hamper flow through at Wal-Mart, but it peers as well, rendering it a more price competitive holiday season."
4. J.C. Penney is lagging behind department store rivals like Macy's and Kohl's .
The company, which is very much in a transitory stage, swung to a loss in the third quarter and provided a fourth-quarter outlook that fell short of Wall Street forecasts.
J.C. Penney is betting on its new CEO Ron Johnson, the man credited with the success of Apple's retail stores. Since taking the post on Nov. 1, Johnson has started to revamp the management team, hiring two former Apple colleagues to fill the chief talent officer and chief operating officer roles.
The department store has been attempting to revitalize its stale image, including brands like MNG by Mango and Sephora and purchasing the Liz Claiborne brand.
But it may be too late for any monumental changes to be evident this Christmas, said Craig Johnson, president at Customer Growth Partners, even with new management.
5. It looks like it will be another difficult holiday season for Sears.
The flailing department store reported a wider-than-expected loss in its third quarter as sales continued to fall.
To turn around the four-year sales slump, hedge-fund manager Edward Lampert and Sears' new CEO Lou D'Ambrosio are turning to contracting out some of its brands and leasing store space to help boost the bottom line. While this may be a near-term fix, experts agree that this strategy is only a Band-Aid.
Steven P. Dennis, who previously held several executive roles at Sears including acting chief strategy officer, said this strategy raises some problems.
"If Sears markets brands externally and shoppers can get Craftsman or DieHard at Costco or Ace Hardware, they have taken away the biggest reason to go to Sears and makes the stores even less relevant," said Dennis, who now runs a consulting firm.
Sears has been aggressively marking down and pricing pressures in appliances have squeezed margins. The stores have also built up a reputation of being old-fashioned and out of date.
But the company is hoping deep Black Friday discounts at its namesake and Kmart stores and its layaway program will help spur sales this holiday season.
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