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Why Gap Stock Fell 18% in February

By Demitri Kalogeropoulos - Mar 6, 2020 at 8:36AM

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Investors' confidence has been shaken by major changes in the retailer's management ranks and in its operating strategy.

What happened

Gap (GPS -6.04%) shareholders underperformed a historically weak market last month as the stock fell 18%, compared to an 8% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline added to a difficult run for the apparel retailer, whose shares are down over 50% in the past 12 months.

A woman holds bags while shopping in a mall.

Image source: Getty Images.

So what

Investors got no more clarity about the struggling business last month and decided to respond to the murkiness by selling off the stock. Gap announced a surprise delay in its fourth-quarter earnings release, which added to considerable upheaval in the business. The retailer has reversed its plan to spin off the Old Navy brand, for example, and is still hunting for a permanent CEO.

Now what

Gap will have an opportunity to answer many of these questions when it announces its fourth-quarter results on Thursday, March 12. The retailer has already stated that comparable-store sales will likely land at the high end of its earlier outlook. Yet Gap is still expecting comps to decline in the fourth quarter as it continues to look for ways to stabilize the business and return to a healthier growth profile .

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