(Adds details on Fisher family holdings)
Dec 4 Shares of Gap Inc fell 10 percent
on Tuesday after the retailer confirmed there has been no change
to its dividend payment policy, following special payouts by
"There has been no change in the company's position as it
relates to returning cash to shareholders," spokeswoman Edie
Kissko told Reuters.
Gap's founders, the Fisher family, owns about 37 percent of
the company, through personal holdings and the Fisher Core
Holdings, according to Reuters Data.
Several companies, including Wal-Mart Stores Inc and
Dillard's Inc have declared one-time cash payouts
recently or moved their payout dates to this year instead of
January 2013, ahead of a likely rise in the dividend tax rate
due to the so-called fiscal cliff.
In some cases insiders have been the biggest beneficiaries
of the special payouts, as well as of shifts of regular
dividends into 2012 from 2013.
The fiscal cliff could come with a combination of tax
increases and spending cuts due to kick in at the beginning of
2013 if Congress and the White House are not able to agree on a
plan to reduce the federal budget deficit.
Gap has, however, not paid a special dividend before, and
sticks to share buybacks and regular dividend payments. Last
month, it announced a quarterly dividend of 12.5 cents per share
payable on or after Jan. 30 to shareholders of record at the
close of business on Jan. 2.
Shares of Gap started falling earlier in the day as market
rumors swirled that the company would not pay a special dividend
as some believed it would. Gap shares closed on Tuesday down
10.3 percent at $30.94 on the New York Stock Exchange.
Overall option volume on Gap was 6.9 times the daily average
with 44,000 puts and 17,000 calls traded so far on Tuesday
afternoon. Investors often turn to equity puts, contracts that
give the right to sell the stock at a fixed price by a certain
date, to speculate on potential share price weakness or protect
a long position in the shares.
"In the options market, we have seen some aggressive buyers
in Gap puts through January expiration, indicating that many
think there is additional downside in the stock," said TD
Ameritrade chief derivatives strategist J.J. Kinahan.
Gap has turned sales at its stores around successfully
following a major change in its management lineup. However, as
the company heads into the new year, it will be up against
"Gap shares were a little overvalued. We'd consider it a
sell at around $35 which is right around where they would have
been," Morningstar analyst Peter Wahlstrom said.
"They are starting to lap some of the comparable sales from
three, four quarters ago so the road becomes incrementally more
(Reporting by Nivedita Bhattacharjee and Doris Frankel in
Chicago; Editing by Andrew Hay and Tim Dobbyn)