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Old Navy Downward Spiral Continues

Old Navy

Gap Inc stock suffered a double-digit drop Friday following the release of its March sales results.

The company, which operates the Gap, Banana Republic and Old Navy chains, reported that net sales for the five-week period ended Apr. 2 were $1.43 billion compared with $1.53 billion in the year-ago period.

As a result, it’s entering April with more inventory than planned, which it said will put pressure on its gross margin rate for the first quarter of fiscal 2016.

“While March proved challenging, we remain focused on taking the necessary steps to improve results across the portfolio throughout the year,” Sabrina Simmons, chief financial officer, said in a press release.

Comparable sales were down across the board. Banana Republic, which has long been a thorn in Gap Inc.’s side, recorded a 14 percent decline in comps in March, versus a 3 percent fall last year. Gap fared better than usual, meanwhile, posting a 3 percent decline in comps that was an improvement on last year’s 7 percent drop.

But Old Navy, usually a glimmer of hope in the company’s otherwise struggling portfolio, suffered a 6 percent decrease in comps, compared with last year’s 14 percent gain. That’s been par for the course of late: the chain’s sales were flat in February, down 6 percent in January, and ended 2015 with a 7 percent decline in December.

Stefan Larsson stepped down as global president of Old Navy to become CEO of Ralph Lauren last October. Jill Stanton, a company executive with more than 25 years of experience in the industry, has been leading the division in the interim.

After falling nearly 14 percent, the stock was trading at $23.84 at 4 p.m.

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