Gap President and CEO Sonia Syngal will depart the company after a brief transition and Executive Chairman of the Board Bob Martin will take on the Interim President and CEO role, effective immediately. Additionally, former Walmart Canada executive Horacio Barbeito has been named as President and CEO of Old Navy, replacing Nancy Green who departed in April 2022.
Syngal received the CEO title in March 2020 after 16 years with the company, including as CEO of Old Navy. When she took the helm she aimed to strengthen the performance of Gap’s overall retail portfolio, which was struggling despite Old Navy’s sales growing from $7 billion to $8 billion annually over the three years leading up to 2020 under Syngal’s leadership — a success that almost led to the spinoff of Old Navy as its own public company but was thwarted when sales at that banner also faltered.
However, Syngal’s efforts have not been enough to turn the tides at the company’s and even the once-thriving Old Navy banner has experienced a downturn that culminated in the departure of President and CEO Nancy Green in April 2022. Wells Fargo analyst Ike Boruchow noted that Gap missed its fiscal 2021 plan by about 35% and that the contributing issues have been “centered” on Old Navy.
Gap’s overall net sales dropped 13% to $3.5 billion during Q1 2022 and comparable store sales fell 14% while online sales declined 17% compared to Q1 2021. Old Navy’s performance was the weakest by a significant margin — sales were down 19% year-over-year compared to an 11% sales decline at Gap, 4% sales growth at Athleta and a 24% sales increase at Banana Republic, which was attributed to a relaunch strategy that included adding new product categories.
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Syngal stated that “the majority of the sales and earnings reduction from our prior guidance stems from Old Navy, primarily assortment imbalances and lower than anticipated demand in key categories like active, fleece and kids and baby” during a Q1 2022 earnings call. She also noted that the banner suffered from “product acceptance issues” and “challenges related to the launch of BODEQUALITY,” its extended size initiative.
Despite the retailer’s challenges, no specific reason was given for Syngal’s sudden departure.
“My fellow board members and I want to thank Sonia for her steadfast leadership and many contributions to Gap during her 18 years with us,” said Martin in a statement. “Most notably, amidst significant global disruption, social unrest and economic instability, Sonia had an immediate impact as Gap 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.”
Martin himself brings four decades of experience as he takes the helm during the search for a permanent CEO. He has worked at both Dillard’s and Walmart, where he was the President and CEO of the International Division. He has been on Gap’s Board since 2002.
Barbeito also brings experience from Walmart, most recently as President and CEO of Walmart Canada. He drove significant growth in the retailer’s online business, experience that will likely prove useful as Gap attempts to improve it own faltering ecommerce program.
“We are thrilled for Haio to bring his authentic leadership style to the team, backed by a strong track record of delivering growth through challenging times at complex global organizations,” said Martin. “Particularly in this environment, Haio’s sincere customer empathy, operational excellence and passion for product and marketing innovation will fuel Old Navy’s competitive strengths on its path to $10 billion, rooted in fun, family, fashion and value.”
Both Martin and Barbeito will face significant challenges in the coming quarter. The retailer expects net sales to decline in the high-single-digit range due to reduced margins and to incur an estimated $50 million in transitory incremental air freight expenses. Gap’s banners also will take an aggressive approach to promotional activity to right-size its assortment, which is expected to further impact margins.
Gap isn’t the only retailer shaking up its leadership as it looks for fresh ideas amid a challenging retail environment. In late June 2022 a total of five c-suite executives departed Dollar Tree, while at Bed Bath & Beyond CEO Mark Tritton left the company along with the company’s EVP and Chief Merchandising Officer. Thenarly July 2022 saw the departure of GameStop CFO Michael Recupero, reportedly for being “too hands off.”
