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Earnings Results: Gap stock drops nearly 12% following larger-than-expected sales declines, departure of Old Navy CEO

Gap Inc. shares fell in the extended session Thursday after the clothing retailer said Old Navy Chief Executive Nancy Green would be leaving the company by the end of the week and that sales would decline more than first believed.

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shares dropped 10% after hours following a 0.6% decline in the regular session to close at $14.29.

The company said it expects larger-than-expected sales declines for the fiscal first quarter because of “macro-economic dynamics as well as the execution challenges at the Old Navy brand.”

Gap said it now expects first-quarter sales to decline in the “low to mid-teens year over year,” compared with a previously forecast decline of “mid to high single-digit year over year.”

Analysts surveyed by FactSet expect Gap sales of $3.7 billion, or a 7.3% decline year over year.

In a statement, Gap said it was time for someone else to head Old Navy, a little more than 18 months after Green had been officially made CEO of the brand after a six-month interim period.

“We believe in the power and potential of the Old Navy brand and the contribution it will have as we execute our Power Plan strategy and drive value creation at Gap Inc.,” Gap CEO Sonia Syngal said in a statement. “As we look to seize Old Navy’s potential, particularly amidst the macro-economic dynamics facing our industry, we believe now is the right time to bring in a new leader with the operational rigor and creative vision to execute on the brand’s unique value proposition.”

Gap said that it was launching an external search for Green’s replacement, and that in the meantime Syngal would work closely with Old Navy.

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