Headwinds at Gap: Old Navy CEO Out, Banana Republic UK to Shutter Ecommerce Operations
Old Navy CEO Nancy Green to depart as Gap Inc. looks to reset its business in the face of economic headwinds. Gap Inc . has downgraded its sales outlook for the first quarter of fiscal 2022 and announced the departure of Old Navy President and CEO Nancy Green, causing shares of the retail group to plummet 18% the day after the announcements.
Citing challenging macro-economic dynamics and “execution challenges” at the Old Navy brand, Gap Inc. is now predicting low- to mid-teens declines YoY in the first quarter, compared to an earlier forecast that foresaw mid- to high-single-digit declines. The company will update its full fiscal 2022 guidance when it reports first quarter results on May 26.
Once a bright spot in Gap’s balance sheet, Old Navy has faced headwinds in recent months with inventory delays and inflation hitting the lower-priced brand particularly hard. Same-store sales at Old Navy were flat compared to 2019 in the fiscal fourth quarter, reported in March .
In another sign of trouble for the parent company, Banana Republic will shut down its ecommerce operations in the UK on May 31, 2022. Gap closed its eight remaining Banana Republic stores in the UK in 2016 , but had maintained ecommerce operations in the region until now. Gap has not yet made a formal statement about the closure of Banana Republic’s UK ecommerce business.
As Gap looks to course correct its larger business, the company said it is taking a “more aggressive approach” to assortment balancing, which will lead to increased promotional levels primarily at Old Navy. The company is clearly also hoping a leadership change will help to right the Old Navy ship. “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 […]
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