Wells Fargo downgrades Gap Inc as CEO Syngal steps down

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Gap Inc (NYSE: GPS) is in focus on Tuesday after a senior Wells Fargo analyst downgraded the clothing retail company to equal-weight citing “deteriorating fundamentals”.

Gap is facing a double whammy

Ike Boruchow lowered his EPS estimates for 2022-2023 on a double whammy of macro headwinds and company specific challenges. In a note to clients, the analyst said:

Majority of issues appear to be self-inflected and centred on Old Navy. As we’re cautious on the space, we can’t continue to recommend a name that’s juggling with company specific challenges on top of growing macro pressures.

Other reasons cited for the dovish call include disappointing growth at Athleta. His price target of $10 a share, however, still represents about a 20% upside from here. But the stock had started the year at $18 and change.

CEO Sonia Syngal stepped down

A day earlier, Gap said its Chief Executive – Sonia Syngal is quitting the role, effective immediately. Executive Chairman of the Board; Bob Martin will serve as the interim CEO. Discussing the news on CNBC, Jim Cramer said:

There’s a sense that this is a stick a fork in it situation. The guidance for everybody was just so low. Wells Fargo says the fundamentals are deteriorating far worse than we would’ve anticipated. It’s a fire drill here.

The retailer forecasts a high-single-digit decline (approximately) in its Q2 sales on zero to slightly negative operating margin on an adjusted basis. It is scheduled to report its fiscal second quarter results on August 25th.

The post Wells Fargo downgrades Gap Inc as CEO Syngal steps down appeared first on Invezz.

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