Dive Brief:

• Gap Inc. Thursday reported revenue slipped 7% in Q4 to $4.38 billion from $4.71 billion the same time last year, compared to Thomson Reuters consensus estimates of $4.46 billion. 

• Fourth quarter same-store sales fell 7%, compared to a 2% increase year over year. Q4 profit fell 33% amid store closures and due to the strong dollar, the company said.

• At the Gap flagship brand, same-store sales fell 6% while at Banana republic they fell 10%. Old Navy’s Q4 same-store sales were flat, which CEO Art Peck attributed to apparel design missteps that he said have been corrected.

• The retailer's full-year profit forecast also fell way below analyst expectations, anticipating earnings to range $2.20 to $2.25 per share, compared to estimates of $2.43 per share. Gap shares fell as much as 4% in after-market trading on the news. 

Dive Insight:

Gap and its three brands—including, in recent quarters, the previously undaunted Old Navy—has been struggling to bring out apparel that appeals to shoppers. The last thing it needed was the kind of style missteps that Peck acknowledged in his conference call with analysts Thursday, including blazers from Banana Republic that were a waste because women couldn’t fit their arms through the sleeves.

But Peck said the company is especially focused on fashion, noting that in addition to design and assortment, its supply chain logistics must also get more nimble.

“It's fascinating as you look at how the Fashion Week activities have played out over the last couple of weeks,” he told analysts during the conference call. “A lot of articles out there about how brands are now making product available on runway immediately to their consumers. We did that in a small way also in Banana Republic. To me what that illustrates is the increasing clock speed inside of this business. How fast trend at the high end of the market disseminates down into the mass market. And it's against that backdrop of increasing clock speed, increasing pace of this business, that we've been making very significant changes in our product process.”

Earlier this year the retailer announced that it's closing stores as it wrestles with these changes. And, while a focus on improved e-commerce may make Gap consider whether more stores should be closed—in an omnichannel environment, stores are emerging as an important way to reach customers and provide fulfillment options.

One hint at Gap's strategy could be found in Peck’s comments about the importance of mobile.

"This year the bulk of our traffic will be mobile traffic to our digital space," he said. "That represents an opportunity because a great majority of that traffic is incremental, but it also means that we offer the customer an emotional, immersive, holistic, engaging brand experience, along with what we have historically done extremely well, which is a very efficient e-commerce transactional experience.”