Gap's Future Uncertain With Successor Search
Stock woes and mixed analyst reaction created a swirl of uncertainty in the days following the recent resignation of Gap’s chief executive officer after 19 years with the struggling apparel giant.
Millard Drexler, known for his keen fashion eye, dropped the bombshell May 21 after the San Francisco-based company’s quarterly board of directors meeting. He will remain president and CEO until Gap finds a replacement—something the board hopes to do by the summer, Gap chairman Donald Fisher said.
Analysts in general praised Drexler for his merchandising skills and vision behind the company’s growth to 4,200 stores but interpreted his departure as a sign that the company’s troubles run deeper than stocking too-trendy inventory.
But many observers welcomed a change in leadership because Gap, which also operates the Banana Republic and Old Navy chains, needs an operation expert to get the company in shape, something Drexler also realized.
“I always loved being close to the merchandise,” he told analysts in a conference call on May 22. “The broader demands of the other areas of being CEO pulled me away from things that I am passionate about.”
Drexler, who has been CEO since 1995, assured analysts in the call that he would not be leaving unless he saw Gap’s turnaround on track, and he vowed to stay as long as the board deems necessary. Gap, which has weathered 24 consecutive months of same-store sales declines, is starting to generate renewed interest among consumers with its product overhaul to more basic wear, Drexler said. The company said on May 21 that same-store sales in May were running better than the first quarter’s 17 percent decline.
“I’ve seen the steady progress each brand has made,” he said. “Believe me, I want to see the turnaround. I worked too hard not to see it.”
In that same call, vice chairman John Lillie said he doesn’t believe the arrival of a new chief executive would lead to store closures. But, he left that decision up to the CEO.
“If the new CEO thinks for some reason there are more stores that could be closed or should be, I think we’d be talking about it,” he said.
According to Fisher, Gap will look for a CEO with experience in general operations and oversight of multiple divisions as well as an appreciation for creativity.
However, the company is not looking for someone to implement radical change.
“We don’t expect somebody to come in and shake this place up,” Lillie said. —Nola Sarkisian-Miller
