"Extremely challenging"... Worst one-liner ever. That's courtesy of Gap's CEO after its sales dropped 4% to $3.7B from February-April. That's a lot worse than expected, so shares slipped 13%. Even show-off golden child Old Navy struggled. Here's the brutal sales breakdown by each Gap brand:
- 😑 Old Navy: $1.8B in sales, down 1%.
- 🙁 Banana Republic: $568M, down 3%.
- 😖 Gap: $1.1B, down 10%.
- 👌The others (Athleta + Intermix + Hill City): $287M, up 6%.
The unacceptable excuse... Gap's CEO partially blamed cold/wet late winter weather for keeping you out of Gap stores. Investors wished he followed up with "but don't worry, we captured those missed in-store sales with online shopping. Rain can't ruin this party!" But he didn't.
Gap's a house turned against itself... #ItCannotStand. Gap's in the process of separating Old Navy from the rest of the company — That lower-cost brand still has growth momentum while the rest doesn't. Investors prefer a clean break between a healthy company and a shrinking one.
- Old Navy will be spun-off to trade as a separate stock starting in 2020.
- Gap will keep thinking of new ideas (hopefully instead of shutting stores).