Gap Inc. reported a wider-than-expected quarterly loss on Thursday and said its sales fell short of estimates, underscoring the challenge facing new CEO Sonia Syngal as she seeks to revive the struggling retailer.
The company said net sales fell 8% to $3.97 billion in the quarter ended Aug. 3, missing analysts’ average estimate of $4.06 billion, according to IBES data from Refinitiv.
Gap’s net loss widened to $199 million, or 59 cents per share, from $184 million, or 55 cents per share, a year earlier.
Excluding one-time items, Gap earned 16 cents per share, missing the analysts’ average estimate of 27 cents.
Gap shares fell 6.5% to $18.12 in extended trading.
The results come as Gap is searching for a new creative director for its namesake brand, after the departure of Rebekka Bay in March.
Syngal, a former Walmart Inc. executive who took over as Gap’s CEO in February, has said she wants to focus on the company’s core Gap, Old Navy and Banana Republic brands and invest in its digital business.
On Thursday, Gap said its namesake brand’s comparable sales fell 7%, while Old Navy’s fell 4%. Banana Republic’s comparable sales rose 3%.
Gap said its online sales grew 2%, contributing to a 6% increase in net sales at its owned and operated digital channels.
The company also said it expects fiscal 2020 net sales to be in the range of $16.4 billion to $16.6 billion, below the analysts’ average estimate of $16.94 billion.
Gap forecast fiscal 2020 earnings per share in the range of $1.70 to $1.75, below the analysts’ average estimate of $1.81.
The company said it incurred $43 million in severance and other transition costs in the quarter, related to cost-cutting measures.
Gap plans to close 230 stores this year, including 120 Gap stores in North America and 90 Banana Republic stores globally.
The company said it expects to incur $250 million to $300 million in total pre-tax charges related to the store closures.
Gap’s results follow a series of disappointing quarters for the retailer, which has been losing market share to fast-fashion chains like H&M and Zara.
Syngal is under pressure to turn around Gap’s fortunes, but analysts say it will take time to implement her plans.
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