Gap Inc. restructures leadership team as Q4 sales drop
Following a drop in sales for the fourth quarter and full year ending 28 January 2023, Gap Inc. has announced several changes to its executive leadership team.
For the fourth quarter, net sales dropped 6% to £3.5 billion ($4.24 billion). Store sales decreased 3% and online sales were down 10%, representing 41% of total sales.
For Q4, Gap Inc. shared the following individual brand results:
- Gap sales down 9% to £916 million ($1.1 billion).
- Old Navy sales down 6% to £1.8 billion ($2.2 billion).
- Banana Republic sales down 6% to £481 million ($578 million).
- Athleta sales down 1% to £363 million ($436 million).
For the full year, net sales dropped 6% to £13 billion ($15.6 billion). Store sales decreased 6% and online sales were down 7%, representing 38% of total sales. The company ended the year with 3,352 stores in over 40 countries, of which 2,685 were company operated.
Reported gross margin was 34.3%, whilst reported net loss totalled £168 million ($202 million).
The financial results coincide with the company's decision to simplify its executive leadership team, creating a "consistent organisational structure across all four brands focused on elevating the product and customer experience across all channels".
As part of this, the role of Chief Growth Officer held by Asheesh Saksena has been eliminated. In addition, the company's Chief People Officer, Sheila Peters will leave the business at the end of 2023.
Mary Beth Laughton, President and CEO of Athleta, has also exited the business. Gap Inc. Executive Chairman and Interim CEO, Bob Martin, will take over until a new Brand President is identified. This follows Athleta's recent launch in the UK via NEXT online.
The company expects these actions to result in annualised savings of ($300 million), where roughly half is anticipated to be realised in the second half of FY23. It also expects first quarter net sales to decrease mid-single digits and FY23 net sales to decrease low to mid-single digits.
Katrina O’Connell, Gap Inc. EVP and CFO, said: “We moved swiftly in FY22 to manage the levers in our control and took action to drive immediate and long-term improvements in our business during what proved to be a challenging year.
"While we are better positioned as we enter FY23, we continue to take a prudent approach to planning and managing our business in light of the continued uncertain consumer and macro environment. We are confident that our continued actions to further optimise our operating model and cost structure are key steps toward positioning Gap Inc. back on its path towards sustainable, profitable growth and delivering value for our shareholders over the long term."