Old Navy Can’t Save Gap This Time as Weakness Sparks Stock Drop

SAN FRANCISCO, United States — Old Navy has been Gap Inc.'s saviour in recent quarters, but its strength isn't enough to quell investors' concerns about its namesake brand's sluggish results.

Gap stores posted same-store sales that fell 5 percent last quarter — more than double the decline projected by analysts. While ongoing gains at its Old Navy value chain helped shore up results, the shares still dropped in late trading Thursday.

Gap has been increasingly relying on Old Navy and its Athleta chain while it works to revive its namesake unit. In June the company named Neil Fiske as chief executive officer of the Gap brand, and his priority has been to fix problems with late deliveries that caused inventory to swell in the first quarter. That forced the retailer to resort to discounts.

Gap shares fell as much as 9.2 percent to $29.44 in after-hours trading. The stock had already dropped 4.8 percent this year through Thursday’s close.

By Janine Wolf; editor: Anne Riley Moffat, Lisa Wolfson, Jonathan Roeder

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