Gap Slump Deepens on 'Disappointing' September Sales Report

NEW YORK, United States — Shares of the Gap continued a six-month slide Friday, falling 7 percent, after a shaky September and the ouster of the creative director for the retailer's Banana Republic stores.

Even sales by its Old Navy Brand, a consistent high point during the company's recent struggles, were not as good as it expected. Gross margins fell and continued discounts are expected, while sales of women's clothes at Banana Republic slumped.

Marissa Webb, the creative director at Banana Republic, will step down next week after 18 months on the job. She remain with the Gap as a creative adviser.

Old Navy president Stefan Larsson left the company last week to become CEO at Ralph Lauren Corp. Over three years at Old Navy, Larsson spearheaded the brand's growth and helped make it Gap's best performer.

Gap Inc. shares fell $2 to $26.95 Friday and are down 37 percent over the past six months.

With the weak results coming so soon after Larsson's exit, Citi Investment Research analyst Paul Lejuez said he is growing more concerned about Old Navy and Gap over the coming quarters. He cut his annual profit estimate for the company.

"With Larsson's departure, Old Navy lost its "star quarterback" whose playbook was going to be used to help turn (around) Gap brand," he said.