It turns out that the departure of its president last year had an effect far more serious on Old Navy than cramping its style — it’s losing the retail brand money.
Forbes reports that, in the two months since Stefan Larsson left Gap Inc. to become CEO at Ralph Lauren, Old Navy’s sales have suffered a dropoff at a rate of high single digits — a doubly unexpected outcome for the company, as the decline occurred during the usually prosperous holiday season.
Prior to Larsson’s departure, Gap Inc. had been looking to replicate Old Navy’s (at that point) successful fast-fashion model and apply it to its other brands, Gap and Banana Republic, in order to give them a boost. That strategy is likely to be reconsidered, now, in light of Old Navy’s more recent struggles, and the Forbes story attests that the situation has Gap Inc.’s investors worried.
The outlet shares that Gap Inc.’s net sales for the five-week period in December fell 4 percent to $2.01 billion, as a result of a 5 percent decline in comparable sales. This outcome, according to Forbes, cannot be written off as symptomatic of an industry-wide dip; rather, it’s the unexpected subpar performance of Old Navy — along with the continued struggles of Gap and Banana Republic — that played a large part.
The Forbes story goes on to attest that when Larsson left the brand, the predominant thinking within Old Navy was that others would pick up where he left off (Larsson is credited with developing Old Navy’s successful merchandising strategies), but the brand’s disappointing November and December sales figures show that something is obviously amiss. Furthermore, posits the outlet, the lack of any comment on the matter from company management could be viewed as a sign that there’s more trouble inside Old Navy — and, accordingly, Gap Inc. — that even the company is not willing to admit to at this point.
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