A gap in crisis situation after CEO becomes the latest CEO to leave the struggling retailer
Struggling retailer Gap (GPS) is in crisis ahead of crucial sell-offs for back to school and the holidays, with the stock down nearly 2% in after-hours trading after it revealed its CEO has left.
Gap surprised some on the street on Monday after the market closed by announcing that CEO Sonia Singhal would be stepping down as CEO after a “short” transition period. In her place, CEO Bob Martin will assume the role of interim CEO.
Syngal was seen as a potential savior for Gap when she took over as CEO in March 2020 from interim CEO Robert Fisher, who in turn stepped in for ousted CEO Art Beck.
Syngal is credited with reviving this important department, the former CEO of Old Navy, and she moved quickly in her early days as a Gap leader to bring back the fashion sense in the company. This included design king and rap star Kanye West signing an expensive, long-term clothing design deal.
Syngal has also worked to improve the company’s supply chain and close underperforming stores.
Unfortunately for Syngal, her time at Gap will be remembered for more promise than delivery—a by-product in the segment of Gap that has left customers in size and style for decades. The West Group never made the extravagance that was expected of it, nor did it generate meaningful sales.
The emergence of the COVID-19 pandemic and its various challenges have not helped the cause of the transformation in Syngal, as a disastrous first quarter ended.
Gap said in late May that first-quarter sales in Old Navy and Gap were down 19% and 11%, respectively, compared to the same quarter last year.
Old Navy’s poor first quarter led to the sudden exit of the brand’s CEO, Nancy Green. Gap on Monday appointed former Walmart Canada CEO Horacio Barbeto to lead Old Navy.
Gap again cautioned against earnings in May as well.
For the year, Gap saw earnings per share of $0.30 to $0.60 compared to Street estimates of $1.30.
On Tuesday, Gap declined to update its full-year earnings outlook. But like other retailers, it warned of a difficult end to the second quarter. Gap said it expects sales to decline in the high single-digit percentage range. Operating margins have been pegged to be “zero” to slightly negative.
Gap shares have fallen 21% during Singal’s tenure, compared to a 43% rise in the S&P 500.
There is no permanent CEO at Gap yet. Possible inventory inflation coming out of the lackluster second quarter of sales. The stock is trading at less than $9 a share on Monday. Hardly a familiar scenario for anyone interviewing to take on the assignment before the end of the year.
Brian Suzy It is a comprehensive editor and Announcer at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on LinkedIn.
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