Gap sales miss estimates, underscoring new CEO’s challenge
Bloomberg
Gap
The results come three days into Chief Executive Officer Richard Dickson’s tenure, who joined the company from MattelBarbie
“We have to do things differently, with a clear focus on redefining our brands’ meaning to consumers, focusing on creativity, designing for relevance as a pursuit rather than a goal, and leveraging our remarkable legacy,” Dickson said in a statement.
Comparable sales fell 6% across Gap’s four brands in the second quarter, a third consecutive drop. That was due mostly to large declines at Old NavyBanana RepublicAthleta
Athleta, which in recent years had supported the company’s growth, faced “product acceptance challenges,” Gap said in its statement, adding it has taken actions to improve performance. The brand appointed Chris Blakeslee, a former executive at the buzzy activewear company Alo Yoga, as its CEO last month.
Earnings per share, excluding some items, were 34 cents, compared with the average analyst estimate of 10 cents. For the full year, Gap now expects net sales will decrease in the mid-single digit range from a year earlier. The company sees third quarter sales down in the low double-digit range, in part due to the sale of Gap China earlier this year.
The shares were little changed in late trading in New York.
Chairman Bob Martin, who has served as interim CEO, executed a restructuring plan that’s expected to save $300 million in annual expenses. But reinvigorating Gap’s brands will take more than cost savings. Investors will be watching closely for details of Dickson’s turnaround plan in the coming quarters as he settles into the top job.
Gap’s report follows mixed results from other apparel retailers. While department stores including Macy’s Inc. and Kohl’s Corp. also showed sales declines, specialty stores like Abercrombie & FitchUrban Outfitters
