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Gap stock declines on wider-than-expected Q4 earnings loss, Yeezy inventory chaos

Yahoo Finance Live anchors Julie Hyman, Ines Ferre, and Brian Sozzi break down the decline in stock for Gap.

Video Transcript

JULIE HYMAN: Let's take a look at some other movers. Gap is one of them. The stock is down 8.6% after missing estimates in its latest quarter. The retailer saw a wider-than-expected loss, net sales down 6% compared to last year. Gap also seeing trouble ahead, estimating first-quarter net sales decreasing in the mid-single-digit range.

And the company already made some management changes, right? Sonia Syngal was out as CEO. Bob Martin, who was one of the controlling family of the company, stepped back in his interim CEO. They don't have another CEO. He said it's close.

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But in the meantime, they're mixing up some other roles. The head of Athleta is out. That had been an area of strength for the company. Not so this quarter where it saw a decline in comparable sales. Also out, I believe, is the chief creative officer. So they're trying to do a bunch of stuff to get things--

INES FERRE: Yeah. I mean, they were already struggling and through the pandemic as well, supply chain issues. They've had issues with styles over the last year. So you're having already these compounded problems. And then you've got as well as this management shakeup that you're seeing.

And also, the outlook that they gave, saying that it's based on the continued uncertain consumer and macro environment. So any which way that you slice it, Gap has been struggling to come back to profitability. And it's got the management issues. And it also has the issues with the consumer as well and the performance of their product. So all around, when you look at it, it's--

JULIE HYMAN: Yeah, some of the analysts have said maybe things are going to get better from here. Inventory looked a little bit better. One of the people who watches this company very closely is our own Brian Sozzi. And he filed this take on it.

BRIAN SOZZI: Another bad earnings report for Gap. Here are three signs I saw in the company's earnings report that the company has just flat-out given up.

First off, inventory down 21% year-over-year. If you are a retailer with any sense of strength or health, you're buying inventory so human beings can go and buy a shirt. Gap not doing that.

Next up, Gap canned its chief growth officer and its chief people officer. These are two important positions that if you are a growing company, you need a growth officer and you need a people person to manage all the people you are using to grow the business. Gap not doing any of that.

And last but not least, Gap coming out here with another $250 million in cost savings. If you are a healthy company, you are not cutting $250 million in costs. I have a bigger story on the complete failure on Gap now on yahoofinance.com. Check it out. Brian Sozzi out.

JULIE HYMAN: And part of that cost savings, by the way, is from the removal of some of those jobs. Just wanted to mention one thing on the inventory front. All season long, really longer than that, we've been monitoring all these retailers who have had big increases in inventory.

And then, as our Myles Udland wrote earlier in the week in a Morning Brief, inventory levels seemed to be normalizing for most retailers. That is, many of them are still seeing increases, but they're not seeing the high-double-digit increases that we were seeing of several months ago when they were caught flat-footed as consumer spending patterns changed. So, again, as Sozz pointed out, to see that inventory drop really does make Gap an outlier in this environment.