Gap sales are struggling, and store visit shows why

Three months after Gap Inc. announced it would split into two publicly traded companies — Old Navy as a standalone entity and a still-unnamed company that would include Gap, Banana Republic, Athleta, Intermix, Hill City, and Janie and Jack — the retailer continues to face an uncertain future.

On Thursday, Gap reported that same-store sales of its namesake brand decreased by 10% in the first quarter of 2019. Meanwhile, comparable sales slumped by 4% across all brands in the portfolio during the same period, including at Old Navy, which posted its first decline in three years.

Read more: Old Navy splits off from Gap

In a call with investors, Gap CEO Art Peck cited a variety of external factors — including unseasonably cold weather, late holiday schedules, and lower tax refunds—before acknowledging significant issues related to inventory and foot traffic.

In the last quarter, Gap was particularly focused on improving these weak spots and reducing expenses, Peck said. This effort includes shuttering more than 230 stores over the next two years and shifting marketing efforts away from its namesake retailer, with plans to roll out new advertising in coming quarters.

While Gap executives remained tight- glipped regarding updates on the Old Navy separation plan, Peck said that the team is “pushing, in many respects, harder than the comfort level is of the organization to move forward.” The break-off is slated to be complete in 2020.

We visited a Gap store in New York City and saw why the brand continues to face an uphill battle: