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Gap Inc shares tumbled after the retailer reported quarterly sales that missed Wall Street’s estimates, an indication that it struggled to attract shoppers during the holiday season despite deep discounts.
Comparable sales, a key gauge for retailers, fell 5% in the fourth quarter ended on January 28, compared with analysts’ average estimate of a 2.7% decline. Gap expects the revenue decline to continue this year.
Comparable sales declined at all four of the company’s main brands: Gap, Banana Republic, Athleta and Old Navy. The latter has historically been a growth driver for the company but has struggled lately. The company noted weakness in the kids and baby category at both Gap and Old Navy, and said that the shutdown of Yeezy Gap, the company’s partnership with rapper Ye, contributed to the sales drop.
Profitability also took a hit. Gross margin was 33.6%, down from the prior quarter due to heavy discounting during the holiday season.
Gap has been looking for a new CEO since July, when Sonia Syngal was ousted as the company struggled to manage inventory.
The San Francisco-based company announced several executive changes in its earnings report, with the CEO of the Athleta brand departing and the position of chief growth officer eliminated.