GAP in Panic Mode as Sales Drop Further

11 May, 2016

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The renowned clothing store and retail chain GAP (NYSE: GPS), has been facing some intensely challenging issues over the past few months. The common people’s retail chain has been undergoing acute financial crisis after the new change in management that was forced upon them due to various conflicts within the company. The company reported strong losses after the change in management. GAP has come close to a virtual collapse of the company and organization. The fact of the matter that the subsidiary investments of GAP as a company aren’t doing well either. This has made matters worse as it is not able to sustain itself through this rough tide.

The rough tide

The GAP CEO announced last week that if sales figures do not boost, it could potentially face a major crisis wherein the entire company will have to shut down its retail stores all across the world. GAP sales have fallen by over 12 percent in the past few months, which has been one of the worst case scenarios of any company and retail chain. This unviable model is meant to be a major problem with the existence of the organization.

Subsidiary brands such as Banana Republic and Old Navy were one of the most successful retail outlets in the past few years and were able to sustain any growing losses that GAP happened to run into. However, the scale of loss and change in management has made it impossible to carry out the same pattern. Earlier this year GAP was the center of many retail brand businesses as the one and only brand that did not get a shot at riding the success wave of the strong and recovering American economy. GAP had run into some major trouble ever since the economic turmoil of 2008, but was able to pull through with some resilience.

Intense competition

Many financial analysts and market experts have pointed out to the dearth in macro investments made into the retail sector. However, overtly critical financial experts have also mentioned that the rise of additional international retail competition from companies like Zara and H&M have made it a lot tougher for GAP to sustain itself over a long period of time. In addition to this the turmoil in internal management worsened the crisis. The month of April has been one of the worst months in terms of sales in the organizations history.

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