- Gap (GPS.US) shares fell nearly 6% before the opening bell after struggling casual apparel retailer announced that CEO Sonia Syngal would step down from that role. Moreover the company informed that current quarter sales would continue to decline.
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Bob Martin, GPS's current executive chairman of the board will act as interim CEO.
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"While a search is underway, the Board has complete confidence in the formidable leadership team to guide the company through this transition. And I look forward to championing this incredible team as they continue to write Gap Inc's next chapter with grit and passion,” Martin said in a press release.
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Also weak financial outlook pushes stock prices lower. Company declined to update its full-year revenue guidance. Similar to its competitors, it warned of a difficult end to the second quarter.
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GAP now expects “net sales in the second quarter fiscal 2022 to decline in the approximately high-single-digit range, relatively in-line with its prior expectations.” Operating margins are pegged to be "zero" to slightly negative.
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Syngal admitted in late May that late-arriving inventory, linked to global supply chain snarls, put Gap on the back foot heading into the spring and left the group unable to react to changing fast-fashion trends that placed more emphasis on formal attire over Gap's traditional casual offers.
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After this news Wells Fargo downgraded GAP to equal weight from overweight and lowered price target from $16.00 to $10.00 per share, while BofA reiterated an underperform rating and lowered the price target to $8.00 from $9.60.
Gap (GPS.US) stock fell sharply in premarket and price is approaching the lower limit of the wedge formation. Should break lower occur, downward move may deepen towards pandemic lows at $4.90. Source: xStation5
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