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Gap Inc reported second-quarter comparable sales and revenue that missed the average analyst estimate, underscoring ongoing weakness at the retailer’s four brands.
The results come three days into Chief Executive Officer Richard Dickson’s tenure, who joined the company from Mattel Inc after his success with the Barbie franchise. While Dickson has yet to lay out a vision for the future of Gap, he’s expected to bring stability to a company that has faced leadership upheaval in recent years amid prolonged weakness.
“We have to do things differently, with a clear focus on redefining our brands’ meaning to consumers, focusing on creativity, designing for relevance as a pursuit rather than a goal, and leveraging our remarkable legacy,” Dickson said in a statement.
Comparable sales fell 6% across Gap’s four brands in the second quarter, a third consecutive drop. That was due mostly to large declines at Old Navy, Banana Republic and Athleta. Net sales also narrowly missed the average estimate.
Inventories fell 29% from a year ago, suggesting that Gap continues to make improvements to its assortment after facing an inventory pileup last year. Sales at Old Navy, Gap’s largest segment, were pressured by “softness in the active category as well as continued slower demand from the lower-income consumer,” the company said.
Athleta, which in recent years had supported the company’s growth, faced “product acceptance challenges,” Gap said in its statement.