Gap Shares Tumble as Sales Plunge at Once-Hot Old Navy Brandby
Gap Inc. fell the most in more than four years after December sales tumbled at its Old Navy chain, which was long seen as the company’s brightest star.
Comparable-store sales dropped 7 percent at Old Navy last month, the San Francisco-based company said in a statement Thursday. Analysts had estimated a decline of 0.3 percent. Total sales fell 5 percent on that basis, worse than the projected 3.9 percent decrease.
The results renewed concerns that Old Navy won’t be able to prop up growth at the company any longer. The division lost its president last year when Stefan Larsson left Old Navy to become chief executive officer of Ralph Lauren Corp., raising questions about its future direction. The latest sales decline at Old Navy was the chain’s second straight monthly drop.
The performance also puts more of a spotlight on problems at the Gap and Banana Republic chains, where sales have suffered from fit issues and off-trend styles. Gap CEO Art Peck said he expects those brands to begin to show improvement next quarter.
The stock dropped 14 percent to $22.91 at the close of trading in New York, the biggest decline since May 2011. Gap had already lost 41 percent of its value in 2015.