Gap reshuffles executive board amid declining sales

Gap Inc. has announced the departure of President and CEO Sonia Syngal, with Bob Martin, the company's current Executive Chairman of the Board to replace her on an interim basis.

The company said in a release that Mayo Shattuck will continue to serve as lead independent director, and announced the appointment of Horacio “Haio” Barbeito as President and CEO of Old Navy.

Martin said: "My fellow board members and I want to thank Sonia for her steadfast leadership and many contributions to Gap Inc. during her 18 years with us. Most notably, amidst significant global disruption, social unrest and economic instability, Sonia had an immediate impact as Gap Inc. CEO, establishing a clear strategic direction and cultural identity that has united this global enterprise as a force for good with powerful brands poised to stand the test of time.

"While a search is underway, the Board has complete confidence in the formidable leadership team to guide the company through this transition."

Syngal added: "Leading this great company and our 100,000-strong employees since 2020, through unprecedented challenges for our industry, and society, has been an immense honour.

“With an exceptional and industry-leading CEO for Old Navy now appointed, I am thankful to have the board’s support in stepping down, ushering in a new opportunity for fresh perspective and rejuvenated leadership to carry Gap Inc. forward."

Barbeito will join the leadership team on 1 August, and will be responsible for leading the brand in "delivering on its unique value proposition, offering style, fit, quality and cultural relevance at jaw-dropping prices".

Barbeito most recently served as President and CEO of Walmart Canada. During his 26-year career at Walmart, he served in a variety of leadership roles across merchandising, marketing, supply chain and store operations with global experience in five countries.

Commenting on his appointment, Martin said: "Haio is a true multi-disciplined retail leader who shares our vision of bringing the democracy of style and service to millions of Old Navy customers, leveraging our greatest assets – our people and our product. We are thrilled for Haio to bring his authentic leadership style to the team, backed by a strong track record of delivering growth through challenging times at complex global organisations.

"Particularly in this environment, Haio’s sincere customer empathy, operational excellence, and passion for product and marketing innovation, will fuel Old Navy’s competitive strengths on its path to $10 billion, rooted in fun, family, fashion and value."

According to its update on second quarter fiscal 2022, Gap is now expecting net sales in Q2 to decline in the approximately high-single digit range, and adjusted operating margin percentage to be zero to slightly negative.

The company expects to incur an estimated $50 million of transitory incremental air freight expense in the quarter as well as inflationary costs on raw materials and freight.

In addition, it has taken a more aggressive approach to assortment balancing resulting in increased promotional activity during the quarter, which it expects will have a negative impact on gross margin in the quarter.