Gap’s (GPS, Financial) stock returned -40.8% in the quarter, which detracted -0.4% from the Fund’s return. Gap is the parent company of Old Navy, the largest individual apparel brand by retail sales in the United States. Poor merchandising decisions, elevated freight costs and supply-chain disruptions related to COVID-19 shutdowns in China negatively impacted same-store sales and profitability. Meanwhile, persistently high oil prices also crowded out consumer demand for apparel. Finally, the stock took another leg down when Old Navy CEO Nancy Green abruptly departed. We believe these problems are known, temporary, and fixable, so we continued to hold our shares.
From Jerome Dodson (Trades, Portfolio)'s Parnassus Endeavor Fund (Trades, Portfolio)'s second-quarter 2022 commentary.
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