Paul Pressler resigned today after a four-year reign at the helm of Gap Inc. (NYSE:GPS). The company has been losing market share to retailers like Abercrombie & Fitch Co. (NYSE:ANF) and American Eagle Outfitters (NASDAQ:AEOS) for years and, its same-store sales have been down in 29 of the last 31 months.
While Jim Cramer generally says to sell when a key executive resigns, this may be a clear exception. Pressler is being replaced by the son of the founders and Chairman of the Board, and there had been ongoing calls for new leadership. Pressler's resignation is not a surprise nor is it unwelcome. Shares of Gap gained over 3% in after-hours trading when the press release came out.
There has been speculation about a break-up of the company that owns Gap, Old Navy, and Banana Republic. New leadership may make that closer to becoming a reality.
Gap's CEO gone
Posted Jan 22nd 2007 9:42PM by Zac Bissonnette
Filed under: Gap Inc (GPS), Abercrombie and Fitch (ANF)
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Reader Comments (Page 1 of 1)
1-22-2007 @ 11:50PM
ayesha said...
It is good news that Pressler is gone. However, the company needs to take a closer look at its merchandising team and clean up house there too. They've consistently missed seasonal trends and that's another major reason the company is in the situation it is right now.
you can read more about this here:
http://trunktbtd.com/news/2007/01/23/gaps-pressler-out-search-for-new-ceo-begins/
1-23-2007 @ 10:37PM
CJ said...
Pressler is a great businessman but not necessarily in fashion. GAP needs a fashion forward person who can rely on the accounting department to keep margins up and markdowns to a minimum. Customers of GAP and all brands know eventually the product will be marked down so, why buy it at full price when in 2 months that cashmere at $178 will be 39.99. GAP also need to reve up to a more sophisticated sales staff especially at the Banana Republic Division.
1-23-2007 @ 11:46AM
nc said...
It's all about mercahndising and perception. The GAP sufers from head to head competition with A&F and Amer Eagle. (Who wants GAP displayed on their t-shirt.) The merchandise does seem to be improving. Much better fabrics, washes, treatments. However, it feels like there isn't a single mindednes in their merchandising scheme, as if they can't decide on a direction, so they use the shotgun approach which can't work. Consumers know what to expect when they step into A&F, not the case with the GAP. Old Navy is all about price and a little fashion. They 're competing with the likes of Target and now Walmart. Banana Republic's merchandise is uninspired and tired. Season after season it's all too much of the same. Consumers need a reason to go into the store. Unless it's a sale, there is no reason because what was there 6 months ago is basically still there in terms of style.