Gap Shares Fall After Company Cuts Guidance and Old Navy CEO Departs

Shares of casual apparel company Gap were falling over 18% on Friday after the company cut its sales guidance and the CEO of its Old Navy division was expected to leave this week.

The company slashed its fiscal first-quarter sales guidance, citing “execution challenges” within the Old Navy business.

The chief executive officer of Gap’s Old Navy division, Nancy Green, had been set to depart her post this week. The company’s CEO, Sonia Syngal, will be working closely with the Old Navy team, Gap said on Thursday evening.

Gap is now expecting low- to mid-teens declines compared with the prior year, adjusted from an earlier forecast that called for mid- to high-single-digit declines.

The ongoing supply chain crisis has been particularly hard on its Old Navy division, which targets a lower-income consumer. Delayed shipments have meant the retailer hasn’t had enough merchandise on hand to meet shopper demand in some instances.

In its fiscal fourth quarter, same-store sales at Old Navy were flat compared with 2019 levels.

Gap said it is taking a more “more aggressive approach” to balancing its merchandise assortment at Old Navy, which has resulted in higher promotional levels.

The company expects to provide an updated fiscal 2022 outlook when it reports quarterly results on May 26.

“As we look to seize Old Navy’s potential, particularly amidst the macroeconomic dynamics facing our industry, we believe now is the right time to bring in a new leader,” Syngal said, regarding Green’s departure.

Shares of Gap are down about 35% year to date including Friday’s declines.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.