Netflix isn’t the only stock to feel shareholders’ wrath this week. Gap Inc. also got trounced.
The once-cool San Francisco clothing company saw its shares plunge by about 20% Friday after it reduced its sales outlook for the first quarter of fiscal 2022, citing “execution challenges” in its Old Navy business.
Gap also said the chief executive of its Old Navy division, Nancy Green, will step down.
The setback is a bit of a surprise considering Old Navy in the past has outperformed Gap’s namesake business and its Banana Republic line.
Old Navy, with its lower-price offerings, had been viewed as a safe harbor for the company as consumers cut back on spending amid soaring inflation.
However, same-store quarterly sales at Old Navy were flat compared with 2019 levels.
Gap said Thursday it has taken a “more aggressive approach” to its Old Navy offerings, which resulted in lower revenue.
“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,” Gap’s CEO, Sonia Syngal, said in a statement.
She said the company is now seeking someone with “operational rigor and creative vision” to take the wheel at Old Navy.
The company may need more than that. Gap’s stock is down about 35% so far this year.