The Gap Inc. (GPS) Made False and Misleading Statements Regarding its BODEQUALITY Initiative Implemented in Old Navy Stores
A shareholder filed a class action on behalf of all investors who purchased or otherwise acquired The Gap Inc. (NYSE: GPS) securities between November 24, 2021 and July 11, 2022, for violations of the Securities Exchange Act of 1934. Gap operates as a global apparel retail company.
According to the complaint, in the second half of 2021 the Company introduced BODEQUALITY, a size-inclusivity campaign introducing up to size 28 in all Old Navy stores. The Company touted this initiative as one of its key drivers of long-term sustainable growth.
However, defendants failed to disclose that: (1) there were execution missteps in size and assortment at Old Navy related to BODEQUALITY, which were adversely impacting Old Navy’s margins and financial results; and (2) contrary to the Company’s statements, there were inventory risks relating to BODEQUALITY that were actually existing that were adversely affecting the Company’s operations.
On April 21, 2022, the Company announced that the CEO of Old Navy had stepped down. On this news, the price of Gap stock fell $2.57, or 17%, per share to close at $11.72 per share on April 22, 2022. On May 20, 2022, The Wall Street Journal published an article revealing that the Company had improperly managed its inventory of plus size clothing at its Old Navy stores causing material declines in margins and business results. On this news, the Company’s stock fell 7%, to close at $10.33 per share on May 23, 2022.
On May 27, 2022, the Company filed with the SEC its 10-Q admitting that execution missteps in size and assortment of inventory at Old Navy adversely impacted the Company’s financial results. On this news, the stock price fell almost 5%, to close at $11.03 per share on May 31, 2022.
Finally, on July 11, 2022, the Company announced that its president and CEO was stepping down and resigning from the Board of Directors. On this news, Gap’s stock price fell 5%, to close at $8.32 per share on July 12, 2022.
What Now: Shareholders who acquired shares of The Gap Inc. between November 24, 2021 and July 11, 2022, must file their papers to be appointed lead plaintiff for the class by February 3, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.