For the latest quarter, Gap’s net sales declined 13 per cent. The apparel maker’s share price has fallen 50 per cent this year as it struggles to win back shoppers. The retailer, which also owns the Banana Republic and Athleta brands, anticipates adjusted operating margin percentage to be zero to slightly negative in its second quarter. Gap expects margins to suffer partially because of increased promotions in the quarter, part of a more aggressive approach to balancing its merchandise offerings. The company expects net sales in the quarter to be down in the high single-digit range, which is relatively in-line with its prior expectations. It forecast a hit from transitory air freight expenses and inflationary costs on raw materials and freight. Gap missed analysts’ quarterly revenue and profit targets several times during the pandemic as it tried to find success in an apparel market reshaped by Covid-19 and fast fashion brands.
Gap is the latest in the retail sector to suffer from snarled supply chains and shifting consumer demand. US retailers are wrestling with the changing demands of post-pandemic American shoppers. In May, Target slashed its outlook for the quarter because of excess inventories and announced plans to implement markdowns and cancel orders.