Spring was going to be the season of renewal at Gap. Following the acknowledgement by the retailer of its style misses and its disappointing results from the previous three-month period, Art Peck the CEO had been optimistic in February about the lineup of new products that were going to hit the stores.
At Gap, there was femininity and color. At the Banana Republic chain of the company, a return to classics was seen as a winner. It would, said Peck, be the no excuses moment for Gap.
However, spring started off brutally for the now more than ever embattled retailer. Sales in March at stores open a minimum of one year were down over 6% from March of 2015, including a drop of 3% at its namesake Gap stores and a dive of over 14% at its Banana Republic chain.
Even former stalwart Old Navy, had a decline of 6%
Relief might be slow in coming. Due to the slow sales, levels are high of inventory, meaning there will likely be the need to resort to deep discounting to clear excess inventory out, pressuring the profits of the company.
The results caused the stock price of Gap to nose dive. Somehow, prior to the results, the stock had increased by 20% in 2016, but in trading on Thursday after the market closed, the stock plummeted 9%.
Since the market opened on Friday, things have not improved.
In Old Navy, the drop appears additionally bad in comparison to its gain last year of 14%, rubbing off the majority of shine from what has been the only bright spot in the portfolio of Gap.
What has not helped is the absence of Stefan Larsson who oversaw a run of three-years of growth at the lower cost Old Navy as president. He recently left and is now the Ralph Lauren CEO.
Pressure has arrived at all angles. The younger shoppers are reported to be shopping less for clothes and more on different experiences, and the ones buying the clothes are hitting the fast-fashion stores such as Zara and H&M.
Gap has been criticized for not staying up with the trends something Zara and H&M have been highly successful at. Gap’s clothes have also been criticized for being bland and having too many fit issues.