Old Navy President and CEO Nancy Green is leaving and Gap Inc. is conducting an external search to fill the role, the apparel retailer said late Thursday afternoon.
Gap Inc. CEO Sonia Syngal, who herself led the value brand until she stepped up to lead the company, will also take over Green's duties at Old Navy in the meantime, according to a press release.
Citing "macro-economic dynamics as well as the execution challenges at the Old Navy brand," Gap Inc. also lowered guidance for its first quarter, saying it now expects net sales to fall in the low- to mid-teens – worse than its previous estimate of a mid- to high-single digit decline.
Gap Inc.'s value brand used to be its star performer — to the point where it once contemplated spinning Old Navy off into its own company in order not to be weighed down by struggling siblings Gap and Banana Republic.
Those two are still struggling the most, but Old Navy has also suffered disappointing results in the past several quarters, leading Gap Inc. to cancel the spinoff and turn to its much smaller Athleta activewear for new hope instead.
In Gap's most recent quarter, Athleta drove most of the sales growth and offset declines at other brands. Athleta's net sales rose 52% from 2019, while Banana Republic fell 11%, Gap fell 13% and Old Navy's sales were "muted," up just 2% from 2019.
Morgan Stanley analysts recently reiterated their concerns about the conglomerate's leadership, upgrading its stock only because they thought the Gap Inc. team's "recent misexecution & potentially overly optimistic 2022 … guidance" and their own bearish view are baked into the stock price.
In a statement, Syngal thanked Green for her tenure.
“We believe in the power and potential of the Old Navy brand and the contribution it will have as we execute our Power Plan strategy and drive value creation at Gap Inc.,” she said. “As we look to seize Old Navy’s potential, particularly amidst the macro-economic dynamics facing our industry, we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand’s unique value proposition."