Gap Inc. offers value after 25% drop, shifting strategy to improve margins and reduce inventory.

Gap Inc. shares have declined about 25% over the past year, trading now at a single-digit price-to-earnings ratio, presenting a compelling value opportunity. Despite a disappointing first quarter and lowered revenue guidance, Gap is shifting its strategy from heavy discounting to better supply planning to reduce excess inventory and support healthier pricing. Inventory levels are now flat year-over-year, positioning the company to launch new collections and potentially boost sales growth. This fundamental reset and margin improvement underpin a reiterated buy rating on Gap Inc.