By Suzanne Kapner And Tess Stynes
Gap Inc. overhauled the leadership of its struggling namesake
brand and said its profit would be weaker than expected this
year.
The retailer, which is working to shore up its core business as
it brings on a new chief executive, said Jeff Kirwan, 48 years old,
will become the global president of the Gap brand, succeeding
Stephen Sunnucks, who will leave the company Dec. 19.
Mr. Kirwan was most recently the parent company's president for
Greater China.
Art Peck, the incoming CEO, who will succeed Glenn Murphy in
February, said he was eager to improve the performance of the Gap
brand, following a string of weak results. The Gap chain's sales,
excluding newly opened or closed stores, fell 5% in the fiscal
third quarter ended Nov. 1. The company said it isn't expecting an
improvement this year.
"Jeff and I have a high degree of urgency about the situation at
Gap," Mr. Peck said. "I'm anxious to get him in there working with
the team to get the brand back on track."
Gap's shares dropped nearly 5% in after-hours trading Thursday
after ending the regular session up 1.5% at $40.14.
The company said it now expects earnings of $2.73 to $2.78 a
share this fiscal year, which ends in early 2015, down from its
previous forecast of $2.95 to $3 a share. Gap warned that the
holiday shopping season once again will be highly competitive this
year and heavy on discounts.
Last month, Gap said Mr. Murphy would step down as CEO at the
company, where he reversed a long-running sales slump but more
recently has struggled to reinvigorate its eponymous brand. Mr.
Peck, a nine-year veteran who leads Gap's digital division, was
tapped as his successor.
The company also changed the leadership of its Banana Republic
brand, where sales, excluding newly opened or closed locations,
were flat in the latest quarter. Andi Owen, 49, who leads the Gap
outlet division, will take over from Jack Calhoun as global
president for Banana Republic, effective Jan. 5. Mr. Calhoun will
leave the company on Feb. 1.
Gap reported quarterly profit of $351 million, down from $337
million a year earlier. Sales were essentially flat at $3.97
billion. The company's operating margin shrank to 13.9% from
14.5%.
Comparable-store sales at its Old Navy unit grew 1%.
Write to Tess Stynes at tess.stynes@wsj.com
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