Strategic Analysis of GAP

The retail and consumer sector has suffered significant losses since the pandemic hit in

2020, with over 250,000 stores closing in the US alone during that period and apparel sales going

down by over 50% (Am Collective, 2020). Various retail brands have been negatively affected

and face bankruptcy due to industry environmental changes. One affected major brand is GAP

Inc., a significant specialty apparel US brand whose portfolio includes a combination of lifestyle

luxury brands such as Athleta, Banana Republic, Gap, and Old Navy (Gap Inc. 2022). According

to its 2022 First Quarter financial results, the company recorded various declines in its store sales

(10%), online sales (17%), and net sales ($3.5 billion, 13% down). It made an operating loss of

$197 million and a total net loss of $162 million (Gap Inc. 2022). Its long-term debt in 2020

increased to $2.21 from $1.24 billion, and the company closed 270 stores by October (Gap Inc.

2022). That same year, the company indicated having spent half its cash reserves due to idle

inventory, raised $2.25 billion in secured debt, and used $1.25 billion to refinance its notes,

leaving it under huge debt (Am Collective, 2020). The company further encountered a loss of

$325 million on debt extinguishment and a debt of $1.8675 billion in 2021’s 4th Quarter, as