Meanwhile, the CEO of Walmart Canada is stepping in to lead Old Navy.
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:
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.
The retailer is looking to grow the number of brands and categories available through its ecommerce channels.
Department store chain Macy’s is welcoming third-party sellers into its ecommerce fold.
The news: Macy’s on Sept. 28 launched a third-party marketplace on its digital channels, adding what it calls a “curated assortment” of products from third-party sellers and brand partners. Macy’s said the marketplace will allow it to expand the amount of available merchandise on its digital channels. This includes:
How it works: Within the shopping experience, third-party merchandise sits alongside Macy's other goods. In a statement, Macy’s said that customers of its website and app “should feel minimal differences." Marketplace sellers will be denoted by a badge. The difference comes behind the scenes, as marketplace sellers will be responsible for fulfilling and shipping their own orders. The offering is powered by Mirakl, a company that provides marketplace technology to retailers such as Best Buy, Kroger and Bed, Bath & Beyond.
Macy’s said the marketplace will also be a place to learn. It can adjust assortments for the changing preferences and buying behaviors of customers.
“Our marketplace complements our existing omnichannel strategy and is another platform we will use to find the most efficient distribution strategy for our partners,” said Josh Janos, Macy’s, Inc. vice president of marketplace, in a statement. “Not only will we continue to maximize brands and existing assortments, but we will use the marketplace to test and customize our assortments based on customer demand.”
For sellers: Macy’s said it will work with a “select, curated group of sellers and brands.” Macy’s said the sellers will be “carefully chosen to ensure alignment with business needs and Macy’s high-quality product and fulfillment standards.” The retailer said it has designed a simple onboarding experience, and will offer seller support and training, analytics and promotional participation.Digital growth: The marketplace launches after Macy’s saw ecommerce sales grow over the last three years. In its earnings report for the second quarter of 2022, Macy’s said digital sales were up 37% over 2019. Digital channels accounted for 30% of Macy’s sales, up 8% from pre-pandemic. For the short-term, Macy’s is facing a number of headwinds due to shifting consumer behavior toward services over goods, and less discretionary spending as a result of higher costs of food and fuel amid inflation. Like other retailers, it also worked through an excess of inventory that was mismatched to demand as a result of supply chain challenges. Digital sales were down 5% year-over-year for the quarter. The retailer sees the marketplace as a way to continue to grow ecommerce offerings in an efficient manner. On the company's earnings call with investors, CFO Adrian Mitchell said the marketplace has the potential to be a “high return investment that is all about assortment and brand expansion under a curated platform and without the inventory handling costs.”