Underperforming Gap makes change at top

By Reuters
Posted Feb. 1 at 1:08 p.m.

Impatient over the slow pace of its sales recovery, Gap Inc. said the head of Gap North America will step down, as the apparel brand tries to reinvigorate its merchandise and flagging stock price.

Marka Hansen, president of Gap North America since 2007, is leaving Feb. 4, and will be replaced by an insider to be named soon, Gap said Tuesday.

Hansen, a 24-year company veteran who held top roles at Gap, Banana Republic and in the International division, was a merchandiser charged with attracting new design talent to bring the most appealing line of clothing into stores and simplifying operations.

But while Hansen made the supply chain function more efficiently and named the respected Patrick Robinson as head designer, her efforts did not bring about a lasting turnaround in sales.

Despite the successful launch of jeans and black casual pants that sparked hopes the retailer was looking to its one-time signature look of classic, casual and comfortable style, the gains were not sustained.

Those merchandising efforts “were not sufficient to lift Gap’s results and fuel market share gains,” wrote Stifel Nicolaus analyst Richard Jaffe in a note to clients.

Morgan Stanley analyst Kimberly Greenberger called the central unanswered question for investors “Gap’s ability to drive positive same-store sales growth, particularly at Gap North America.”

“Management is dissatisfied with the inconsistency of the brand’s performance in North America, and today’s leadership change seems to be a positive step in taking the brand forward and improving strategy globally,” Greenberger wrote.

Most recently, Hansen’s attempt to update Gap’s iconic logo came under fire from customers who preferred the original blue box.

Hansen’s departure was not unexpected on Wall Street, as Chief Executive Glenn Murphy has publicly expressed frustration over the pace of recovery at Gap stores.

Sales at Gap’s namesake North American stores open at least a year, or same-store sales, fell 8 percent in December and were negative in five other months of 2010.

“The competitive environment is much more challenging than it was in Gap’s glory days and it would be difficult for any merchant to fix,” wrote Nomura analyst Paul Lejuez in a note.

Gap, which also operates the Old Navy and Banana Republic chains, also said in a statement that it was “comfortable” with the current consensus profit forecast for its just-ended fiscal year.

Wall Street analysts on average are expecting a companywide profit of $1.82 per share for the year, according to Thomson Reuters I/B/E/S.

The retailer said it would comment on its outlook on Thursday, when it reports its January sales results. Analysts estimate companywide same-store sales fell 2.9 percent last month.

Gap shares were up 23 cents to $19.50 in early afternoon trade on the New York Stock Exchange.

Read more about the topics in this post: ,

Companies in this article

Comments are closed.