The revolving door keeps swinging at Gap Inc.
Sonia Syngal, president and chief executive officer, has left her position and the company’s board, and will be succeeded on an interim basis by Bob Martin, executive chairman of the board.
Syngal’s departure comes as the $16.7 billion Gap Inc. has had a sustained inability to pull itself out of the doldrums. Its three biggest brands — Old Navy, Gap and Banana Republic — have all been faltering for some time, though Old Navy only in the last few seasons after a series of missteps over sizing and fashion miscues.
Banana Republic, though still experiencing declining sales as of late, since the fall has exhibited more stylish and appealing collections harking back to the brand’s safari-style roots. The brand needs to reclaim customers it lost over the years.
Since 1995, Gap Inc. has had five CEOs — Mickey Drexler, Paul Pressler, Glenn Murphy, Art Peck and Syngal — none of whom were fashion merchants, with Drexler the exception.
Syngal earned the respect of the industry during her early days at Old Navy, where she was instrumental in catapulting the growth of the family apparel business. However, her strengths are in operations and logistics and she is not considered a merchant.
She rose to CEO of Gap Inc. in March 2020, right at the start of the pandemic, and the stock did show some increases for awhile, though the business and the stock started to decline heading into 2022.
With the announcement of her departure, which came late Monday afternoon, the stock as of 6 p.m. fell 2 percent to $8.59 close to its low for the last 52 weeks of $8.16 and down from a high of $32.49.
Also on Monday, the company said former Walmart Inc. executive Horacio “Haio” Barbeito will become president and CEO of Old Navy, the value and family-oriented chain, and Gap’s biggest division. Barbeito will join Old Navy on Aug. 1, succeeding Nancy Green who left in late April this year. Old Navy has been by impacted by size and assortment imbalances, ongoing inventory delays and product acceptance issues in some key categories.
Barbeito most recently served as president and CEO of Walmart Canada, where he led more than 70,000 associates and drove significant growth in the online business, Gap said in its announcement. During his 26-year career at Walmart, he served in a variety of leadership roles across merchandising, marketing, supply chain and store operations with global experience in five countries. He has served in CEO roles at Walmart for 10 years, first as president and CEO of Walmart Argentina and Chile before taking the role as CEO of Walmart Canada, where he has spearheaded a modernization effort to grow that market’s omnichannel business.
Bob Martin is a 40-year industry veteran with extensive retail experience at corporations including Dillard’s Inc. and Walmart, where he served as CEO of its international division. He has served on the Gap Inc. board since 2002, as lead independent director from 2003 to 2015, and as executive chairman since 2020.
“Leading this great company and our 100,000-strong employees since 2020, through unprecedented challenges for our industry, and society, has been an immense honor. Through it all, Gap Inc. and its dedicated teams have seized change as an opportunity, restructured for future growth, crystallized unique brand identities rooted in cultural relevance and fiercely chased transformation,” said Syngal in a statement. “With an exceptional and industry-leading CEO for Old Navy now appointed, I am thankful to have the board’s support in stepping down, ushering in a new opportunity for a fresh perspective and rejuvenated leadership to carry Gap Inc. forward.
“The company’s cofounders, Doris and Don Fisher, created a lasting and undeniable legacy for Gap Inc. as a company with a heart. It is a home for creatives, innovators, data scientists, operators and customer advocates, to build their careers and break boundaries, just as it enabled me to do the same,” added Syngal.
“My fellow board members and I want to thank Sonia for her steadfast leadership and many contributions to Gap Inc. during her 18 years with us. Most notably, amidst significant global disruption, social unrest and economic instability, Sonia had an immediate impact as Gap Inc. CEO, establishing a clear strategic direction and cultural identity that has united this global enterprise as a force for good with powerful brands poised to stand the test of time,” said Martin. “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.”
The company is expecting net sales in the second quarter of fiscal 2022 to decline in the approximately high-single-digit range, relatively in line with its prior expectations.
The company continues to navigate margin headwinds and, as previously communicated, still expects to incur an estimated $50 million of transitory incremental air-freight expense in the quarter as well as inflationary costs on raw materials and freight. In addition, it has taken a more aggressive approach to assortment balancing, resulting in increased promotional activity during the quarter, which it expects will have a negative impact on gross margin in the quarter.
Furthermore, the company now anticipates second-quarter fiscal 2022 adjusted operating margin percentage to be zero to slightly negative.
Gap Inc. went into the red in the first quarter of this year, reporting a net loss of $162 million, or 44 cents per diluted share, versus a year-ago profit of $166 million, or 43 cents a share. The operating loss was $197 million in the quarter, versus an operating profit of $240 million a year ago.
Net sales dropped 13 percent in the quarter ended April 30, to $3.48 billion, down 13 percent from $3.99 billion in the 2021 quarter. Comparable sales were down 14 percent year-over-year.
Syngal did orchestrate and oversee some bold maneuvers at Gap Inc., among them massive streamlining of the Gap and Banana Republic store fleets, encouraging diversity, inclusion and sustainability initiatives, reconstituting the European business from company to third party-owned stores, and introducing the Yeezy Gap and Yeezy Gap Engineered by Balenciaga lines, which have trickled out via various item drops and haven’t yet had a material impact.
Just last month, Syngal presided over the opening in San Francisco, where Gap Inc., is based, of a new lineup of side-by-side stores — Athleta, Banana Republic, The Gap and Old Navy — serving as location testing grounds for new products, merchandising approaches and other experiences. On opening day, as reported by WWD, the Athleta store featured styles in colors unavailable anywhere else. Old Navy experimented with mixing vignettes and categories. The Gap showcased historic outfits from the brand’s archives, as worn onscreen by Sharon Stone, Missy Elliott and Kim Basinger, with all digital in-store displays. The Banana Republic even featured a bar.
Unfortunately for Syngal, she’ll no longer be at Gap Inc. to see through the innovations.