Gap Routs Investor Appeal in Old Navy Plus-Sized Clothing Suit

Gap Inc. investors lost their bid to revive allegations the clothier concealed it overestimated customer demand for an Old Navy plus-sized clothing initiative.

None of the challenged statements were false or misleading, the US Court of Appeals for the Second Circuit said Thursday. Nor did the investors adequately allege the level of intent or recklessness for securities fraud claims, the opinion said, affirming the proposed class action’s dismissal.

Investors said Gap’s repeated warnings about accurately gauging inventory were misleading because the problems had already occurred. But the risk disclosures were generic to the clothing industry, not specifically connected to the ...