Dive Brief:
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Old Navy, the Gap Inc. brand that has essentially been carrying the retail company in recent quarters, saw same-store sales fall 7% last month, the company said Thursday.
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The decline missed analyst estimates of closer to a 0.3% decrease. Total sales fell 5%, compared to estimates of a 3.9% fall.
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Gap shares fell to as low as $24.30 in extended trading in the aftermath of the report. Gap shares lost 41% of their value last year.
Dive Insight:
Gap Inc. spent last year closing stores, laying off employees even at its headquarters, and shuffling its design teams. Old Navy chief Stefan Larsson threw the company a curve ball by leaving to head up Ralph Lauren, though the biggest change needed is at its Banana Republic and flagship Gap brands.
News of a faltering Old Navy is especially tough, considering that the brand has been the bright spot for the company until recently. Old Navy's same-store sales rose 4% in the third quarter ending in November, while same-store sales at Gap and Banana Republic fell 4% and 12%, respectively.
Still, 2016 could be the year that Gap finally figures it out. After all, CEO Art Peck just arrived last year, and has spent much of 2015 not just shuffling teams, but also pinpointing where problems lie. For Banana Republic, Peck says the problem is largely in women's clothing. And Gap must regain the fashion design vision that once made it an American retail powerhouse. The question now is—what about Old Navy?
