Sonia Syngal, Gap’s chief executive officer, was moved from the company’s Old Navy division, which she ran from 2016 until 2020, to run the battered company. Instead, she has been at the helm as Gap has moved to retail irrelevancy. It has lost its ability to compete in the national retail sector. No one may be able to turn it around. Blame the board for not acting sooner.
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When Gap reported its results for the fiscal first quarter that ended April 30, it was hard to imagine that it could have been worse. Some retailers have flourished this year, but Gap has moved in the other direction. As is often true with CEOs of failed companies, Syngal said the company could be turned around:
Our Q1 results and updated fiscal 2022 outlook primarily reflect industry-wide headwinds as well as challenges at Old Navy that are impacting our near-term performance. While we are disappointed to deliver results below expectations, we are confident in our ability to navigate the headwinds and re-stabilize the Old Navy business in order to deliver continued progress on our long-term strategy.
The actual results said otherwise. Revenue dropped 13% to $3.5 billion. Store sales declined 10%. Online sales, the sign of almost every retailer’s future, fell by 17%. The company lost $162 million in the quarter, compared to a profit of $166 million last year. Sales at the company’s largest brand, Old Navy, retreated a breathtaking 19% to $1.8 billion. Gap found it necessary to call out its cash position, a rarity among large retailers. It put that figure at $845 million.
The stock has declined 65% in the past year.
The forecast for the full year was that revenue would decline by low to middle digits. In other words, Gap’s performance may not improve at all.
The board chair, Bob L. Martin, carries some of the blame. At one point, he was the head of Walmart International. That means he should understand exactly how difficult Gap’s present situation is. Robert J. Fisher and William S. Fisher, both parts of Gap’s governance team for a long time, have watched and done little as the company disintegrates.
Gap will need to get much smaller if it has any chance to be a significant national retailer again. This means layoffs and the shutdown of hundreds of stores. Syngal should not be the one who tries to save the company, particularly because the odds are so low.
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