Gap Nears 2-Year Low After Old Navy Shake-up, Deflated Forecast

(Update 1: Includes market reaction, context, further details)

Shares of Gap slumped close to 20% in early trading Friday (Apr 22) after the struggling apparel retailer warned of weak sales and underperformance at Old Navy, its largest brand.

The latest drop worsens a year-long slump in Gap’s stock which has now fallen 65% over the past 12 months and is approaching levels not seen since July of 2020, while its market value has shriveled to less than $4.5 Billion.

On Thursday (April 21) the 50-year-old apparel brand announced that it was replacing Old Navy CEO Nancy Green this week, while also lowering its revenue outlook for the current quarter and year.

Gap Inc., which in addition to Old Navy owns Athleta and Banana Republic brands, stated in the same announcement that it was lowering its sales guidance for its first fiscal quarter of 2022. The new guidance is “to approximately low to mid-teens year-over-year declines from its prior guidance of mid to high single digit year-over-year declines.”

Regarding Green’s exit, Gap Chief Executive Sonia Syngal said in a prepared statement: “As we look to seize Old Navy’s potential, particularly amidst the macroeconomic dynamics facing our industry, we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand’s unique value proposition.”

GAP indicated it will conduct an external search for a new chief executive for Old Navy and in the meantime, “Syngal will work closely with the Old Navy team … to lead through this transition.”