Gap fires CEO after his efforts fail to reignite sales growth

Bloomberg

No longer the khaki king of the ’90s, Gap Inc has been in need of an overhaul for a very long time — and Art Peck won’t be the one to deliver it after all.
Gap fired its chief executive officer after his turnaround efforts failed to reignite sales growth, with disappointing third-quarter performance sending shares plummeting in late trading. The apparel company, which includes the namesake Gap brand, Athleta and Banana Republic, brought back a member of the founding family to lead while it figures out a longer-term plan.
Peck’s termination comes after years of struggles at the company. Although the retailer made several public missteps in recent years — like making blazers without armholes big enough for an average woman and jumping on the regrettable Normcore bandwagon — many of its problem areas aren’t even unique in today’s difficult retail environment: relying on routine 50% discounts and maintaining a major presence in declining American malls.
“It was probably the most overdue management change that we’ve seen in a while,” said Stacey Widlitz, president of SW Retail Advisors.
“There comes a point and time when you can’t sit and do the same thing over and over again.”

Sales Slump
After a brief transition, Peck will exit the president and CEO role and vacate his post on the retailer’s board. Robert Fisher, the company’s current non-executive chairman and son of Gap co-founders Don and Doris, will step in as president and CEO on an interim basis.
The company declined to comment beyond the press release announcing Peck’s departure.
The company said in a statement that companywide comparable sales appeared to be down 4% in the third quarter, which ended on November 2, with that measure falling 7% at its namesake brand.
“This was a challenging quarter, as macro impacts and slower traffic further pressured results that have been hampered by product and operating challenges across key brands,” Teri List-Stoll, executive vice president and chief financial officer, said in the statement announcing Peck’s exit.
The company needs to find a way to sell more goods at full price and figure out a way to capture a new, younger consumer base, Dana Telsey, CEO of Telsey Advisory Group, said on Bloomberg Television.
Gap, founded in 1969 in San Francisco, rose to prominence as a denim emporium selling jeans from Levi Strauss & Co, another Bay Area institution. It helped pioneer the vertical integration of retail and started producing its own branded goods.