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Gap shares plunge, analyst says company in big trouble

Has Gap lost its way?
Has Gap lost its way?

Gap is in big trouble, as the once-mighty retailer has lost its way, Deutsche Bank retail analyst Paul Trussel said Tuesday.

"Gap used to be a core, basic, apparel retailer with low prices and great product for the family. I think there's other retailers that frankly have taken that place within the retail sector," he told CNBC's "Squawk on the Street."

Trussel added that retailers like H&M and Ross Stores have taken considerable market share from Gap. "This is all happening while the consumer has been very willing to buy more and more on their mobile device," he said.

Gap did not immediately respond to CNBC's request for comment.

Sale signs are on display in the windows of a Gap retail location.
Traders: How to play retail amid Gap drubbing

Gap shares fell 11.5 percent Tuesday, touching its lowest levels since 2012, on the heels of its first-quarter results warning. The company said Monday first-quarter revenue and profits would fall short of Wall Street's estimates, and issued a forecast for the period that reflected the slower traffic it saw in its stores, which led to more discounting.

SW Retail Advisors President Stacey Widlitz said most of Gap's problems come from within.

"We can blame all of retail's problems on Amazon, or we can actually look at some of these brands and say 'what are you thinking?'" said Widlitz in a Tuesday interview with CNBC's "Power Lunch."

"If you have been into a Banana Republic or a Gap, in the last six months, you know … the fits are wrong, the stripes are wrong, the florals are wrong. This is a largely self-inflicted problem. Yes, mall traffic is down; yes, the consumer is spending less on apparel, however, if you choose not to get your fashion correct, and also not keep up with your supply chain and fast fashion, that is not going to help the situation," she said.

The company is scheduled to report first-quarter results May 19.

Over the past three months, Gap shares have fallen more than 14 percent.

GPS in past 3 months

Source: FactSet

— CNBC's Krystina Gustafson contributed to this report.