American fashion giant Gap Inc. is still on the slide: even Old Navy, the concern's rock, even had to deal with a turnover drop in December. Its share also got hit hard on the stock exchange, its biggest drop in 4 years' time.
Group turnover down 3 %
Gap Inc. sold 2.01 billion dollars' (1.84 billion euro) worth of clothing and accessories in the five weeks of December. That is below last year's December, which resulted in a 2.1 billion dollar turnover. With level exchange rates, this would have been a 3 % turnover drop.
Subsidiary chains Gap (-2 % compared to +5 % in December 2014) and Banana Republic (-9 % versus status quo a year ago) have had to deal with lower turnover for months, but this time Old Navy is also a victim: the chain's turnover dropped for the second month in a row, now 7 % on a like-for-like basis. That is not only much worse than the -0.3 % analysts had expected, but a major change in fortunes compared to last year when Old Navy managed to sell an additional 8 % in December.
It has become instantly and painfully clear that Old Navy, which lost its CEO Stefan Larsson to Ralph Lauren Corp., is no longer able to pull Gap Inc. along, which created turmoil with investors. The share dropped 14 % after its numbers were revealed, its biggest blow since May 2011 and another sizeable blow after it had already lost 41 % of its value in 2015.
In a short statement, CEO Art Peck stated Gap and Banana Republic would perform better in the next quarter.