What happened

Shares of Gap (GPS -3.83%) stock lost 17% of their value in May, according to data from S&P Global Market Intelligence. Investors were disheartened by another negative earnings report.

So what

Gap has been struggling with a changing retail landscape for years already. Once the most popular apparel retailer in the U.S., it's fallen out of favor as trends move in other directions and it tries to keep up. 

The Gap brand in particular hasn't changed much in several decades, even as management continues to say that it's changing its identity. Its basics aren't appealing to newer consumers. Gap sales decline 13% from last year in the 2023 first quarter.

The Banana Republic brand has been made over several times, and after success as an upscale, office-focused brand, sales tanked as people moved to work-from-home and athleisure trends. The newer iterations aren't resonating with customers, and sales fell 10% year over year in the first quarter.

Even the reliable Old Navy brand, once the flagship of the company, is feeling pressure now. It's the lower-priced label and targets customers most affected by inflation. Sales dropped only 1% in the quarter.

Finally, the Athleta athletic wear brand, which was the company's beacon of light for some time, didn't manage to capture the moment with a series of fashion misses, and sales were down 11%.

This all contributed to a 6% company revenue drop in the first quarter and an $18 million net loss.

Compounding the company's problems, it has been through a cycle of CEOs over the past few years that aren't generating the necessary changes, and it's been out of a CEO for almost a full year. 

Now what

Gap stock looks like a risk today. It was in serious danger at the beginning of the pandemic when stores were closed, sales tanked, and it wasn't sure it could pay its bills. It managed to raise funds to stay afloat, and it's made huge progress since then.

However, it's now plagued by the same problems it had before that. Until it can figure out how to become relevant again, investors should be wary of small and temporary fixes. It's especially vulnerable without a CEO. The announcement of a new CEO will probably have a positive impact on the stock, but investors should wait until the company demonstrates real progress and a material change in its growth strategy before investing in the stock.