Gap clothing retailer CEO Art Peck resigns after a disastrous 3rd quarter results, the results of which were much worse than forecasts, writes Bloomberg. The shares of the company after that fell by 8%.
- On Thursday, the board of the Gap holding (which includes the eponymous store, Athleta and Banana Republic) fired its CEO, who held this position since 2015. The company has hired Robert Fisher, the family member of the founder of Gap, while it is developing a new sales strategy.
- In Q3 2019, the retailer’s comparable sales decreased by 4%. In addition, the annual forecast for earnings per share worsened – from $ 1.70 to $ 1.75 against $ 2.05–2.15 in 2019. Gap shares after this announcement fell by more than 8%.
According to Stacey Widlitz, SW Retail Advisors analyst, the decision of the board of directors to resign Peck was belated because in recent years the company adhered to an outdated strategy – discounts and placement of stores in shopping centres. “The moment has already come when you cannot sit and do the same thing over and over again,” Widlitz explained.
In the 1990s and early 2000s, Gap was at the forefront of sales and mass fashion, but in the last decade, it has been plagued by various troubles – from operational errors to the classically failed rebranding in 2010. The company was not saved by expansion outside the United States, which coincided with the crisis of 2008, and by 2015, when it was headed by Peck, it had already lost to Zara and Forever 21 the struggle for a key segment of the audience.
Now the company must find a way to sell more products at full price and find a way to attract a new, younger audience of consumers, said Dana Telsi, head of Telsey Advisory Group. According to analysts, millennials no longer buy jeans for $ 80.
Problems with sales appeared not only at Gap. So, according to the H&M financial report for the first half of 2019, the company’s net profit decreased by 11%. And the Forever 21 retailer was generally forced to declare bankruptcy and close.