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Shock at Gap Inc.: CEO Sonia Syngal Steps Down

Gap Inc. CEO and president Sonia Syngal will step down from her position and from the company’s board. She will be departing the company following a brief transition.

Effective immediately, Bob Martin, the company’s current executive chairman of the board, will fill the departed Syngal’s roles on an interim basis.

Additionally, the specialty retailer unveiled that the vacant Old Navy president and CEO role has been filled, with Horacio “Haio” Barbeito selected to lead the brand. Barbeito will join Old Navy on Aug. 1. Old Navy’s previous president and CEO Nancy Green exited the role in April.

Syngal’s departure comes three years after she was elevated to the role in March 2020. Her tenure has largely been associated with turning the Gap Inc. business around via its Power Plan 2023, which consisted of cutting down its brick-and-mortar store footprint—namely in mall-based real estate and in company-owned locations overseas.

But that turnaround has seen its fair share of hiccups in the wake of the global supply chain constraints, with the retailer attributing late-arriving inventory to its $162 million net loss in the first quarter, as sales fell 13 percent to $3.5 billion. Old Navy even had to scale back its hyped size inclusivity push, Bodequality, as stores hosted fewer middle sizes, which sold out too quickly. As such, many locations were stuck with an abundance of very small and very large sizes.

The Athleta and Banana Republic parent says it is taking a more aggressive approach to assortment balancing this quarter, which will result in increased promotional activity.

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“Leading this great company and our 100,000-strong employees since 2020, through unprecedented challenges for our industry, and society, has been an immense honor. Through it all, Gap Inc. and its dedicated teams have seized change as an opportunity, restructured for future growth, crystallized unique brand identities rooted in cultural relevance and fiercely chased transformation,” said Syngal in a statement. “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.”

Interim CEO Martin is a 40-year industry veteran with experience at retailers including Dillard’s and Walmart where he served as CEO of its international division. He has served on the Gap Inc. board since 2002, as lead independent director from 2003 to 2015, and as executive chairman since 2020.

“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,” said Martin. “While a search is underway, the Board has complete confidence in the formidable leadership team to guide the company through this transition. I look forward to championing this incredible team as they continue to write Gap Inc.’s next chapter with grit and passion.”

Mayo Shattuck will continue to serve as the board’s lead independent director.

Like Martin, Barbeito is a Walmart alum, most recently serving as president and CEO of Walmart Canada where he led more than 70,000 associates and drove growth in the online business. 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.

“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 organizations,” said Martin. “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.”

Gap Inc. also reiterated its quarterly sales guidance, expecting net sales in the second quarter fiscal 2022 to decline in the approximately high-single digit range, relatively in-line with its prior expectations.

But the specialty retailer also warned of margin pressure due to the upcoming promotions and an expected estimated $50 million incremental air freight expense in the quarter, as well as inflationary costs on raw materials and freight.

The company now anticipates second quarter fiscal 2022 adjusted operating margin percentage to be zero to slightly negative. Shares of Gap Inc. ticked down slightly in after hours trading following the news.

Gap is set to report results for the second quarter on Aug. 25.