Gap Inc.On Thursday, the company lowered its profit guidance for full-year as it revealed a decrease in fiscal first quarter sales. This was due to Old Navy’s drag down.

Stocks dropped more than 15% in the hours following.

Old Navy’s quarter performance was hampered by an unbalanced selection of sizes, inventory delays, and an increase in price-lowering promotional offers.

CNBC’s Chief Executive Officer Sonia Syngal said that Old Navy’s targeted customer is the lower-income one, and is feeling squeezed by inflation. Shoppers also have quickly shifted from buying up active clothes and fleece hoodies — Old Navy’s “sweet spot” — to looking for party dresses and office clothes, she said in a phone interview.

“We’re dealing with really volatile consumer signals — whether it was last year in Covid, or this year’s post-Covid behaviors,” said Syngal. “Over time we will see customer preference in product types balance out.

In late April, Gap had warned of obstacles within the Old Navy businessWhen it made the announcement about the resignation of its chief executive officer Nancy Green, Syngal was there to assist. As the company searches for a replacement to Green, Syngal assisted in leading the discount clothing brand while Syngal was away.

Gap expects to make between 30 and 60 cents per Share for the fiscal year 2022. This is an adjustment. This is a decrease from the prior ranges of 1.85 to $2.05. This is well below the analyst expectations of $1.34 per Share, according to Refinitiv data.

Katrina O’Connell, Chief Financial Officer of Gap stated that the company had revised its outlook in order to address Old Navy’s “executional problems” and an unfavorable macroeconomic environment. Inflationary costs are also being considered. Gap’s name brand is also being affected by a slowerdown in China.

The net loss of Gap was $162 million or 44c per share in the period ending April 30, compared to net income of $166million or earnings of 43c per share a year ago.

From $3.99 billion last year, revenue fell by roughly 13% to 3.48 billion. It was slightly more than expected at $3.46billion.

Gap stated that it lost sales by 5 percent due to Gap getting a boost from stimulus checks a year back, and 3 percentage points through divestitures, closing stores, and transitioning to a partnership business model in Europe.

The same-store sales overall fell by 14% compared to the previous year. This is more than the 12.2% decline analysts were expecting. Gap reported that its in-store sales fell 10% and online sales decreased 17%.

This is the breakdown of sales in same stores by brand

• Gap is down 11% from year to year
• Old Navy is down 22% over the past year
• Banana Republic: Up 27% Year-over-Year
• Athleta down 7%

Gap executives acknowledged that Thursday was also a good day for them a recent push to sell more plus-size itemsOld Navy was unable to stock enough core sizes and didn’t have sufficient extended sizes.

CFO O’Connell said that the launch of inclusive sizing may have led to us losing focus on messaging. This is the core reason Old Navy works, and that is value messaging. We are really trying to get back to that.”

Gap’s April 30 inventory was 34% higher than the year before.

O’Connell stated that these levels would begin to fall throughout the year but may remain high in the second quarter.

O’Connell stated that inventory levels had been significantly higher than expected. She also said that almost half the increase was caused by prolonged transit times, which she believes won’t get better any time soon.

This is a developing story. Stay tuned for new updates.