Gap is also continuing to improve its inventory levels, which were down 27% in the quarter at $2.3 billion compared to a year ago. The sales dip was attributed to ongoing product acceptance challenges, including "misses" in color, print, pattern, silhouette and straying away from the brand's "performance DNA." Net sales were down to $321 million, an 11% drop year over year, and comparable sales were off 13%.
Athleta is still missing the mark when it comes to what consumers are looking for.The company attributed the drop to an "outsized" 24% jump in sales in the year-ago period that was driven by a shift in consumer preferences as many returned to work and going out following Covid lockdowns. Banana Republic saw $432 million in sales, down 10% year over year.Sales were also affected by Gap store closures, the company said. Similar to Old Navy, the eponymous banner also saw strength in its women and baby categories, and softness in activewear and kids. Gap reported $692 million in sales, a 13% drop year over year, and a 1% increase in comparable sales.Old Navy, which caters to a lower-income consumer, is more vulnerable to macroeconomic conditions. Sales were strong in its women's and baby categories, but the gains were offset by softness in active and kids and an ongoing slowdown in consumer demand. Old Navy, which accounts for the majority of Gap's revenue, saw net sales drop 1% to $1.8 billion and comparable sales down 1%.The company attributed the bump in margins to lower air freight expenses and a slowdown in discounting, which was partially offset by ongoing inflationary costs. Gross margins increased by 5.6 percentage points year over year to 37.1%, and improved on the prior quarter, too, when margins were 33.6%. Gap, like other retailers, relied on promotions to clear that inventory, particularly at Old Navy, but in its most recent quarter, it was able to hold the line on discounts - and benefit from reduced air freight expenses that have led to better margins for retailers across the industry. In the year-earlier period, many retailers were still battling pandemic-related supply chain issues and it landed Gap with a glut of inventory the company had trouble selling because it was out of season or out of style. But digital sales are up 39% compared to the fiscal first quarter of 2019, the company added. Online sales, which represented 37% of total net sales, also dropped 9% year over year, but the company said that was due to the fact that sales trends are getting more in line with pre-pandemic metrics. In its most recent quarter, comparable sales were down 3% and store sales decreased 4% compared to last year. Martin said previously the next chief executive will be an external candidate. "But this only underscores how strongly the board is committed to appointing the right person as our next CEO, one that has passion, strong vision and customer obsession that will take this company forward." "When I took the role of interim CEO in July, I did not expect to still be speaking to you in our first-quarter earnings call," said Martin. Gap announced its chief people officer Sheila Peters would also be leaving, albeit at the end of the year.ĭuring an earnings call with investors, Martin said the search for a new CEO continues, but he didn't share a timeline of when the job would be filled.
Athleta CEO Mary Beth Laughton left the company and its chief growth officer role was eliminated. In March, it also announced a major leadership shake-up. The cuts remove layers of red tape and bureaucracy that will allow Gap to be more nimble in its decision-making and focused on its creative efforts, the company said.
Last month, Gap told investors it will lay off about 1,800 employees, more than three times as many as the 500 layoffs it announced in September, as part of a broad effort to cut costs and streamline operations.īetween this year and last, the company has cut 25% of its headquarters roles, which has increased the number of direct reports each manager has from two to four and reduced management layers from 12 to eight, the company said. "I understand that we have surfaced these issues before, and what I would say is simply this work has been derailed for far too long and it is imperative that we get after it in earnest," he said. "Consistent with what you've heard from us over the last few quarters, we continue to take the necessary actions to drive critical change at Gap Inc., to further improve the trajectory of our business and to get us back on a path to delivering consistent results," interim CEO Bobby Martin told investors on an earnings call. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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