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The news: Sonia Syngal will step down as CEO of Gap Inc., the apparel company announced on Monday. Syngal is set to remain only for a brief transition. Meanwhile, board chair and former Walmart International CEO Bob Martin will step into the CEO role on an interim basis. There were no immediate plans announced for the addition of a permanent CEO at Gap Inc., which owns the brands Gap, Old Navy, Banana Republic and Athleta.
New leader at Old Navy: Along with Syngal’s departure, Gap Inc. announced that Horacio “Haio” Barbeito will become CEO of Old Navy, effective August 1. Barbeito comes to Old Navy from Walmart, where he worked for 26 years. Most recently, he served as CEO of Walmart Canada, and previously led the retailer’s Argentina and Chile business. Barbeito succeeds Nancy Green, who left the top role at Old Navy in April.
Key quote: “With an exceptional and industry-leading CEO for Old Navy now appointed, I am thankful to have the board’s support in stepping down, ushering in a new opportunity for fresh perspective and rejuvenated leadership to carry Gap Inc. forward,” Syngal said in the announcement.
The backstory: An 18-year veteran of Gap Inc., Syngal stepped into the CEO role in 2020 after herself leading Old Navy. She was credited with turning around that brand, which is Gap Inc.'s largest, during her time at the helm. But it is struggles at Old Navy that have marked her final months as CEO.
While Gap did not give a reason for the departure, issues at Old Navy were in focus on the company's first quarter earnings call. In the quarter ended April 30, the company reported that revenue was down 13% year-over-year overall, and a loss of $162 million. Online sales were down 17%. As a result, the company cut its outlook for the year. Gap Inc.’s recent challenges are a mix of internal and external factors:
- Inventory mismatch: Due in part to bottlenecks in the global transport system that moves goods, Old Navy ordered items earlier than usual to sync with longer lead times. But by the time many items arrived, they were out of fashion with a public that was trading fleece and activewear for items to return to work and social settings. This left the company with excess inventory, which it then had to steeply discount in order to move. At the time, Syngal outlined a plan to reset inventory for back-to-school and holiday shopping.
- Size inclusivity execution: Old Navy also mismanaged demand in the launch of a size-inclusive initiative called Bodequality, which offered every style of women’s clothing in sizes 0-30. This also resulted in having too much inventory that wasn’t in demand at some stores. Many shoppers bought middle sizes but the smallest and largest sizes remained on shelves. This led to further need to discount and rebalance inventory, even as all sizes remained available online.
- Inflation: The company also found inflation hurting demand in the first quarter, especially among lower-income consumers. While the CEOs on many first quarter earnings calls said they saw demand remain strong, Gap Inc. executives said it observed weakness in consumer spending. Inflation was a big reason that it reduced expectations for top-line growth.
The numbers: Along with the announcement of the personnel change, Gap Inc. laid out several projections Monday for the just-completed second quarter of 2022. As previously detailed, the company said it expects net sales to decrease in the high single-digit range, while incurring $50 million in costs for air freight and inflation. In new projections, the company expects that additional costs for promotion to rebalance inventory will have a negative effect on gross margin, while it now expects adjusted operating margin percentage to be zero to slightly negative. Full results will be reported on August 25.
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The virtual store was built by Emperia.
As it opens a new boutique, Italian women’s fashion brand Pinko is opening a virtual store that is designed to create a personalized experience for customers to browse handbags digitally.
Pinko's virtual shopping experience powered by the platform Emperia, which allows users to access metaverse environments through commonly-used devices such as laptops and mobile phones. The launch of the store, which is dubbed Pinko Galleria, is timed with the opening of the brand’s boutique in the exclusive Galleria Vittorio Emanuele in Milan.
The store has exclusive offerings that allow the brand to cross the physical and digital worlds:
- New handbags that are specifically designed for the experience, and displayed through 3D modeling that offers education and
- NFTs from Pinko called Meta Love Bags.
- Communities for women that are designed for empowerment and independence.
The opening comes on the heels of last week’s closing of a $10 million Series A investment round for Emperia, which has also worked with Bloomingdale’s and Dior. Founded in 2019 by fashion and retail expert Olga Dogadkina and VR technologist Simonas Holcmann, Emperia’s platform provides the technology and visual infrastructure that architect the virtual stores, as well as data and analytics that provides key insights to retailers about how shoppers interact with the store and what is needed to personalize experiences.
The virtual store is designed to complement the physical store. It presents new opportunities for brand-building that is untethered from physical parameters. It also makes the exclusive more accessible. Shoppers anywhere in the world can now enter the store, even as the physical location is only in Milan.
“The new experience allows audiences, worldwide, to experience the unique, bold design that Pinko is so well-known for, wherever they choose to,” says Olga Dogadkina, Co-founder & CEO at Emperia, in a statement. “Our 3D technology ensures a high merchandise-viewing quality, which complements its real-life twin product, to the smallest detail, allowing Pinko to present and directly-sell its exclusive capsule collection in a way that simulates a realistic shopping experience.”
Inside the virtual store, shoppers have the opportunity to browse and navigate through a space that is laid out and merchandised in 3D with all the hallmarks of a Pinko physical store, right down to a full layout of the brand's signature pink. They’re also greeted by music. A sign that the store is not in the physical world arrives upon turning toward the front. Look out the window, and a shopper will find that they are high above the clouds.
That’s a new way to elevate the experience.
Here are more photos of the Pinko virtual store:
Handbags in Pinko's virtual store. (Courtesy photo)
Hands holding handbags. (Courtesy photo)
NFTs in Pinko's virtual store. (courtesy photo)
Looking out the window at Pinko's virtual store.