Gap has struggled for what seems like a decade to get it right. Sales of its Old Navy division seemed to pull it out of trouble. It was not enough. Gap kept closing stores and firing management. Last year’s holiday season saw no improvement. Financially, Gap is disappearing. So is its relevance as a large American retailer. (These are 25 brands Americans are abandoning.)
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The primary anxiety about Gap as it announced its quarterly results was its eye toward the future. CNBC reported, “Gap issued a muted outlook for fiscal 2023. It plans to close 50 to 55 Gap and Banana Republic stores and open 30 to 35 Athleta and Old Navy stores.” Changing its store network has been like moving chairs on the Titanic.
Results across Gap’s big division were terrible in terms of same-store sales. For Gap, they dropped 8% year over year to $1.1 billion. Old Navy same-store sales dropped 6% to $2.2 million. Old Navy is as close to a flagship as Gap has. Banana Republic’s same-store sales dropped 6% to $578 million.
Revenue dropped to $4.2 billion from $4.5 billion The company lost $273 million.
Gap’s reaction to trouble is generally to fire people. As if this would help it. Gap’s small Athleta lost its president and CEO, Mary Beth Laughton. The head of human resources, Chief People Officer Sheila Peters, was also dumped. Perhaps she did not fire people fast enough for the taste of interim CEO Bob Martin. He said he was looking to replace himself, but who with any sense would want the job?
Gap management said it would save $300 million, but not for a while.
Martin made a cryptic comment: “To enter fiscal 2023 in a more competitive position, we took quick and effective action to clear excess inventory, improve assortment balance, particularly at Old Navy, and to meaningfully optimize our cost structure, resulting in $550 million in annualized savings identified to date.” No one with any sense will believe it.
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