The US clothing group Gap Inc. closed the 2022/23 financial year with high losses after a disappointing final quarter. In addition to the current results, the parent company of the brands Gap, Old Navy, Banana Republic and Athleta also announced further austerity measures and personnel changes on Thursday evening.
The group has to accept a net loss of 202 million US dollars
In the past fiscal year, which ended on January 28, group sales were 15.6 billion US dollars (14.8 billion euros) and thus 6 percent below the previous year’s level. At the same time, the gross margin fell. The company had to accept an operating loss of 69 million US dollars after an operating profit of 810 million US dollars in 2021/22. The bottom line was a net loss of 202 million US dollars (191 million euros). In the previous year, the group had booked a surplus of 256 million US dollars.
In the final quarter, the clothing supplier failed to meet market expectations. Revenue for the November-January period shrank 6 percent to $4.24 billion due to declines across all brands, and net loss rose to $273 million from $16 million in the same quarter last year. Given the weak numbers, Gap’s share price immediately fell 8 percent.
Chief Growth Officer Asheesh Saksena and Athleta CEO Mary Beth Laughton have to go
In view of the latest development, the group announced further cuts in order to reduce its costs. Among other things, the organizational structure is to be further streamlined. The management hopes that the additional measures will result in further savings of around 300 million US dollars per year in the medium term. The company had previously initiated a program aimed at reducing annual costs by $250 million.
The new decisions have already had personnel effects. The position of Chief Growth Officer, most recently held by Asheesh Saksena, has been abolished with immediate effect. The company also announced that Mary Beth Laughton, President and CEO of the Athleta brand, must vacate her post immediately.
“We believe that Athleta has incredible potential but has suffered from a lack of product acceptance over the past few quarters,” said interim CEO Bob Martin, who has been interim at the helm since Sonia Syngal stepped down last summer, in a statement. Now is the right time to bring in “a new leader who can position Athleta for long-term success,” Martin said. In the future, the group will also have to do without Chief People Officer Sheila Peters, who will leave the company at the end of the year.
For the current financial year 2023/24, the management is currently expecting a decline in sales in the “low to mid single-digit percentage range”. However, the gross margin is expected to be higher than in the previous year.