Gap Inc. (NYSE: GPS) scraped its financial outlook for the year after reporting a net loss in its fiscal second quarter and as its Old Navy chain continues to struggle. The company detailed its execution challenges and rocky macroeconomic trends for withdrawing its 2022 guidance.
The global clothing and accessories retailer reported earnings of USD0.08 per share, compared to the expected loss of USD0.02 a share. Revenue amounted to USD3.68 Billion, higher than analysts anticipated USD3.82 Billion. Additionally, Gap disclosed a net loss of USD49 Million or USD0.13 per share. In comparison, the retailer had reported a net income of USD258 Million, USD0.67 a share the previous year.
“This is a pivotal moment in time. While we search for a new leader, I am taking on the role as Interim President & CEO of Gap Inc. with a deep commitment to the company’s success and impatience for change. Having navigated the global retail industry across brands and markets, I am not approaching this work from the sidelines,” said Bob Martin, Executive Chairman and Interim CEO, Gap Inc. “We are taking actions to better optimize profitability and cash flow in the near term, reducing operating costs as well as impairing unproductive inventory.”
As a consequence of the company’s cost-cutting efforts, it will be reducing the amount of new Old Navy stores it planned to open in the second half of the year.
“While our elevated inventory and pressured margins are current realities against unsettled market conditions, they do not define our ability to capitalize on Gap Inc.’s strengths to win,” said Martin.