Sales at Gap (GPS) on a same-store basis were off 23% in January, which is breathtaking and sad. Revenue for the chain moved down from $935 million in the month last year to $757 million.
No part of Gap’s business is doing well, but the one division that is close to drowning the entire company is Old Navy. It needs to be closed or have a huge number of its stores shuttered.
Last month, Old Navy same-store sales fell 34%. While Gap said the company’s overall earnings would be at or above forecasts for the quarter because of cost cuts, that cannot continue indefinitely. There are only so many people to fire.
In a deep retail recession, a brand which is losing a third of its sales year-over-year is not going to make a comeback. Keeping Old Navy is going to kill more shareholder value, and do it soon.
Douglas A. McIntyre
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