Gap has reported a 13 percent year-over-year drop in sales to 3.5 billion dollars in the first quarter of the year, with comparable sales down 14 percent.
Online sales at the US fashion giant declined 17 percent, while its store sales were down 10 percent.
The company swung to a net loss of 162 million dollars from a net profit of 166 million dollars a year earlier.
“Our Q1 results and updated fiscal 2022 outlook primarily reflect industry-wide headwinds as well as challenges at Old Navy that are impacting our near-term performance,” Gap CEO Sonia Syngal told investors.
She continued: “While we are disappointed to deliver results below expectations, we are confident in our ability to navigate the headwinds and re-stabilize the Old Navy business in order to deliver continued progress on our long-term strategy.”
Gap Inc. sales decline across Gap and Old Navy brands
Old Navy net sales of 1.8 billion dollars were down 19 percent compared to last year, negatively impacted by size and assortment imbalances, ongoing inventory delays, and product acceptance issues in some key categories. Comparable sales were down 22 percent.
Meanwhile, Gap brand net sales of 791 million dollars were down 11 percent. Global and North America comparable sales were both also down 11 percent.
Banana Republic net sales of 482 million dollars were up 24 percent, while comparable sales were up 27 percent.
Athleta net sales of 360 million dollars were up 4 percent compared to last year, while comparable sales were down 7 percent.
The company ended the quarter with 3,414 store locations in over 40 countries, of which 2,825 were company operated.
Gap lowers fiscal 2022 outlook
The company now expects fiscal 2022 revenue to decline in the low to mid-single digit range versus last year, while gross margin is expected to be in the range of 36.5 percent to 37.5 percent.
It expects reported diluted earnings per share in the range of 40 cents to 70 cents, and adjusted diluted earnings per share in the range of 30 cents to 60 cents.
Katrina O’Connell, executive vice president and chief financial officer of Gap, said: “We are revising our fiscal 2022 outlook to reflect the impact of certain factors impacting our near-term performance, including execution challenges at Old Navy, an uncertain macro consumer environment, inflationary cost headwinds, and a slowdown in China that is impacting Gap Brand.”
The company continues to expect to open about 30 to 40 stores each for Old Navy and Athleta in fiscal year 2022. As part of its 350-store closure plan, the company expects to close about 50 Gap and Banana Republic stores in North America during the year.