Gap shares plunged more than 20% on Friday after the mall-based clothing giant slashed its sales forecast and said the CEO of its Old Navy chain is leaving the company.
The abrupt departure of Nancy Green, who was named chief executive of Old Navy nearly three years ago and had held senior leadership positions at Gap since 2009, came amid steeper-than-expected sales declines at the budget chain – once the retail darling in the Gap portfolio which also includes Athleta and Banana Republic.
As the apparel giant’s best selling brand, Old Navy was supposed to be spun off in 2020, but plans for the separation were scrapped that year shortly after Gap CEO Art Peck stepped down unexpectedly in Nov. 2019.
“As we look to seize Old Navy’s potential, particularly amidst the macro-economic dynamics facing our industry, we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand’s unique value proposition,” Gap CEO, Sonia Syngal said in a statement on Thursday. Syngal is temporarily assuming the helm of Old Navy, the company said.
On Thursday the San Francisco-based company also lowered its first quarter sales forecast to low-to-mid-teens declines compared with the prior year, driven mostly by “persistent challenges at Old Navy” according to a research note from Wells Fargo analyst Ike Boruchow.
Gap is blaming much of its woes on supply chain disruptions that left some stores with not enough merchandise during the crucial holiday season.
But at Old Navy stores, the problem seemed to be a lack of merchandise that consumers wanted to buy.
Syngal said the chain had “increased promotional levels” and that Gap was taking a “more aggressive approach to assortment balancing.”
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