Gap stock slides 18% after cutting sales guidance; CEO of Old Navy division to leave

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An employee hands a customer a shopping bag at an Old Navy Inc. store in San Francisco.
David Paul Morris | Bloomberg | Getty Images

Gap Inc. announced Thursday that the CEO of its Old Navy division, Nancy Green, is leaving the business this week.

Gap Chief Executive Sonia Syngal will work closely with the Old Navy team as it searches externally for Green’s replacement, the company announced in a press release.

In light of what it called “execution challenges” within its Old Navy business, Gap also slashed its outlook for net sales growth in the first quarter of fiscal 2022. It’s now projecting low- to mid-teens declines compared with the prior year, adjusted from an earlier forecast that called for mid- to high-single-digit declines.

News of Green’s abrupt departure comes as Gap struggles to weather continued logistics disruptions and rising inflation that threatens to curtail consumer spending.

A snarled supply chain has been particularly hard on its Old Navy division, which targets a lower-income consumer, the company said when it reported quarterly results in early March. 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 Thursday that it has also taken a “more aggressive approach” to balancing its merchandise assortment at Old Navy, which has resulted in higher promotional levels. It didn’t offer further clarity on the issue, but more markdowns is likely weighing on the retailer’s profits.

Gap said it will 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 macro-economic dynamics facing our industry, we believe now is the right time to bring in a new leader,” Syngal said, regarding Green’s departure.

She added that the company is looking for someone with the “operational rigor and creative vision” to execute on the retailer’s plan.

Gap shares fell nearly 11% in extended trading on the news. The stock is down about 19% year to date as of Thursday’s close.

Find the full press release from Gap here.


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