Gap Inc. (GPS) shares slumped lower Tuesday after Sonia Syngal said she will step down as group CEO after only two years and the struggling apparel retailer added current quarter sales would continue to decline.
Syngal, who agreed to stay on during a brief transition period, will be replaced on an interim basis by chairman Bob Martin, who has served on the Gap board since 2002. The group also added that Haio Barbeito, formerly the head of Walmart (WMT) Canadian unit, was named CEO at its Old Navy brand, effective August 1.
Gap, which posted a wider-than-expected first quarter loss while slashing its full-year profit forecast in late May, said sales for its fiscal second quarter would likely fall by "high single digits" while margins would continue to be squeezed by rising freight and input costs.
Syngal admitted in late May that late-arriving inventory, linked to global supply chain snarls, put Gap on the back foot heading into the spring and left the group unable to react to changing fast-fashion trends that placed more emphasis on formal attire over Gap's traditional casual offers.
“Leading this great company and our 100,000-strong employees since 2020, through unprecedented challenges for our industry, and society, has been an immense honor," said Syngal. "Through it all, Gap Inc. and its dedicated teams have seized change as an opportunity, restructured for future growth, crystallized unique brand identities rooted in cultural relevance and fiercely chased transformation”.
Gap shares were marked 3.1% lower in early afternoon trading Tuesday to change hands at $8.48 each, a move that would extend the stock's year-to-date decline to around 54%.
Gap's first results, as well as its near-term outlook, contrasted sharply with the better-than-expected April quarter reports from retailers such as Macy's (M) and Nordstrom (JWN), each of which were able to better serve customers focused on more formal fashion choices heading into the first summer without pandemic restrictions in more than two years.
Macy's CEO Jeff Gennette said the group saw a "notable shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods" as it forecast stronger-than-expected full-year earnings of $4.53 to $4.95 per share after its first quarter profit beat.
Nordstrom, meanwhile, recorded $3.57 billion in April quarter sales, up 18.7% from last year, and said it sees adjusted earnings in the region of $3.38 and $3.68 per share, with sales rising as high as 8% from 2021 levels, for its full financial year.
