Gap CEO Art Peck to Step Down
November 07 2019 - 5:52PM
Dow Jones News
By Micah Maidenberg
Gap Inc. said Chief Executive Art Peck will step down
immediately and be replaced on a temporary basis by Robert Fisher,
the son of the company's founders.
The apparel maker, which is in the process of spinning off its
Old Navy chain, has struggled for years with sluggish sales. On
Thursday, it warned of another quarter of weak sales and lowered
its profit targets for the year. Shares tumbled 7% in after-hours
trading.
Mr. Peck, who joined Gap nearly 15 years ago and became CEO in
2015, also will relinquish his board seat.
Mr. Fisher, who is Gap's chairman and a board member since 1990,
was previously interim CEO.
In February, Mr. Peck announced a plan to separate the rapidly
growing Old Navy budget brand from the rest of the business,
creating two publicly traded companies in 2020. Mr. Peck was
expected to remain CEO of the parent of Gap, Banana Republic and
Athleta.
The split was an acknowledgment of how much of its once-powerful
grip on U.S. consumers Gap has lost, as shoppers shifted to
fast-fashion chains such as H&M and Zara. Old Navy now exceeds
the original Gap brand in sales.
But on Thursday the company warned that sales were falling
across its brands. Global comparable sales at the Gap brand dropped
7% in the third quarter ended Nov. 2, while those for Banana
Republic dropped 3%. Old Navy's global comparable sales fell
4%.
On Thursday, the company said it expects adjusted earnings per
share of $1.70 to $1.75 for the current fiscal year, compared with
its previous forecast of $2.05 to $2.15 a share.
Mr. Peck, a former consultant, prized data over design as Gap
CEO. He eliminated the chief creative positions at the company's
brands and put operational executives in charge. He closed hundreds
of stores and shortened production lead times to better match
supply with demand.
Nevertheless, profit is down more than 20% since Mr. Peck was
named CEO in 2015, while sales over that period barely budged. Net
income totaled $1 billion for the year that ended in February, down
from $1.26 billion in 2015. Sales over that period increased less
than 1% to $16.58 billion.
Mr. Fisher's parents, Doris and Don Fisher, opened the first Gap
store in 1969, selling denim and other casual clothes. The chain
went on to open hundreds of stores and dressed a generation in its
brightly colored T-shirts and khaki pants.
It acquired Banana Republic, which sold clothes more suitable
for the office, in 1983, and launched the lower-priced Old Navy
chain just over a decade later.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
November 07, 2019 17:37 ET (22:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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