An employee hands a shopping bag to a customer at an Old Navy Inc. store in San Francisco.
David Pablo Morris | Mayor Bloomberg | fake images
gap inc announced Thursday that the CEO of its Old Navy division, Nancy Green, will step down this week.
Gap CEO Sonia Syngal will work closely with the Old Navy team as it searches externally for Green’s successor, the company said.
In light of what it called “execution challenges” within its Old Navy business, Gap also cut its outlook for net sales in the first quarter of fiscal 2022. It now projects declines of between 10 and 10 years compared to the year earlier, adjusted from a previous forecast that called for mid- to high-single-digit declines.
News of Green’s abrupt departure comes as Gap struggles to weather ongoing logistical disruptions and rising inflation that threatens to curb consumer spending.
A tangled supply chain has been particularly harsh on its Old Navy division, which targets a low-income consumer, the company said. when it reported quarterly results in early March. Delayed shipments have meant the retailer hasn’t had enough merchandise on hand to meet shopper demand in some cases.
In its fourth fiscal quarter, same-store sales at Old Navy were flat compared to 2019 levels.
Gap said Thursday that it has also taken a “more aggressive approach” to balancing its assortment of merchandise at Old Navy, which has resulted in higher levels of promotion. It didn’t clarify the issue further, but further downgrades are likely to weigh on the retailer’s profits.
Gap said it will provide an updated outlook for fiscal 2022 when it reports quarterly results on May 26.
“As we look to harness the potential of Old Navy, particularly amid the macroeconomic dynamics facing our industry, we believe now is the right time to bring in a new leader,” Syngal said, regarding Green’s departure.
He added that the company is looking for someone with “operational rigor and creative vision” to execute the retailer’s plan.
Gap shares fell nearly 11% in extended trading on the news. The stock is down 19% year-to-date as of Thursday’s close.
Find the full Gap press release here.