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Wall Street analysts dub Gap the ‘weekend winner’

Wall Street is declaring Gap Inc. a “weekend winner” as strong department store traffic over the Thanksgiving and Black Friday holiday hints at a better-than-expected holiday season.

While analysts were impressed with mall shopping overall, Gap companies including Old Navy were the “biggest surprises.”

“Traffic and conversion appeared solid on Black Friday, despite sales continuing to be dispersed throughout the entire weekend and an ongoing migration of Black Friday shopping online,” wrote Jefferies analyst Randal Konik. “Old Navy and Gap both offered a 50 percent off store-wide sale, essentially flat to last year, which seemed successful in driving traffic and conversion.”

“We believe holiday is off to a strong start at The Gap and reiterate our buy rating.”

Konik also noted that while subsidiaries like Gap and Old Navy adopted sales similar to those seen in prior years, Banana Republic broadened its 50 percent off discount to all regular priced merchandise versus 50 percent off five regular-priced items item last year.

Shares of Gap have bested the market so far this year, up more than 32 percent versus the S&P 500’s 16 percent climb. Shares were up 3 percent in premarket trading Monday as the bullish calls from Wall Street rolled in.

SunTrust analyst Pamela Quintiliano joined Konik in praising Gap’s strong showing.

“Old Navy was the on-mall holiday weekend winner followed by American Eagle and Express,” wrote Quintiliano on Monday. “Our biggest surprise was mall traffic, which was above our expectations despite online continuing to gain broad-based momentum. Throughout the weekend, traffic and conversion were consistently higher than we have seen in years.”

Citing retail researcher ShopperTrak, the analyst noted that the “big win” was that traffic was down under one percent on Black Friday and declined just over 1.6 percent for Thanksgiving and Black Friday combined. Adobe Analytics calculated that Thanksgiving online spend rose 18 percent.

“The weekend looked pretty good,” said retail expert Dana Telsey on CNBC’s “Squawk Box” on Monday. “For the most part, promotions were the same as last year. That’s encouraging: the fact that traffic was essentially flat is a good thing, you’re not seeing the deterioration.”

“You know, Gap, Old Navy: there were lines out the door,” she added. “Gap is probably the one that’s going to be one of the surprising ones.”

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