Wanted: CEO for Struggling Clothing Retailer

Discussion
Jan 23, 2007

By George Anderson

Four-plus years after being named chief executive officer at Gap Inc., Paul Pressler is out. The company announced yesterday that it and Mr. Pressler had “mutually agreed” on his departure.

The ousting, which has been a source of speculation in retail industry circles for some time, will serve to once again raise the question of whether the company will seek a buyer(s) for all or some of its businesses.

An unidentified source described as close to the company by Women’s Wear Daily, sought to quash the speculation. “They’re not going to break it up. Right now, they’re looking for someone who can turn it around. The Fishers absolutely don’t want to sell.”

As to the Fishers, Robert Fisher, the son of Gap founder Donald Fisher, will serve as interim chairman of the company. The Fisher family owns 25 percent of Gap Inc. stock.

In a company press release, Mr. Fisher said, he would focus on working with Gap Inc. employees “to enhance our focus on what has been at the heart of the company’s past success, reinvigorating our brands and charting a new course for the future that will deliver strong returns for our shareholders.”

At the beginning of his tenure, Mr. Pressler had received high marks for establishing fiscal discipline at the company. His failing, ultimately, was on the fashion side of the business where he and those he hired failed to connect with Gap shoppers.

Bobbie Lenga, managing director of the retail practice at executive recruiter Russell Reynolds Associates, told The Associated Press, “The back end of the house was something that Paul did a phenomenal job. But he is not a strong product person. Product is what drives the business.”

Gap Inc. has created a search committee made up of Adrian Bellamy, chairman of The Body Shop International plc, Donald Fisher, Domenico De Sole, former president and chief executive officer, Gucci Group NV and Bob Martin, former president and chief executive officer of Wal-Mart International.

According to the company, the committee was looking to recruit a chief executive officer “who has deep retailing and merchandising experience ideally in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline.”

Among those on the early speculation list, according to a New York Times report are Roger Farah, the president of Polo Ralph Lauren and Paul Charron, the former head of Liz Claiborne. Mickey Drexler, CEO of J. Crew and former CEO of Gap Inc., has denied interest in returning to the company.

Discussion Questions: What do you think Gap Inc. should be looking for in its new CEO? How important will talent evaluation be in the ultimate success or failure of the next CEO of Gap Inc.? Are there any executives you would like to throw into the mix as candidates for the next CEO of Gap Inc.?

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11 Comments on "Wanted: CEO for Struggling Clothing Retailer"


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Adam Borrello
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Adam Borrello
15 years 3 months ago
The comparison to Jones Apparel, Oxford, Liz Claiborne, or others may be on point. The need for effective merchandising almost goes without saying. However, all in the aforementioned group have multiple brands. Brands that speak to distinctly different demographics. The success of A&F starts with its revitalization of A&F merchandise, but more recently the launching of Hollister. Similarly, Liz, Oxford, VF and other have found growth and strength through acquisition and licensing. This multiple demographic, multi-tier approach helps to insulate an organization from the pit-falls almost certain with only one brand (Hilfiger, Gap, and others). It helps to keep the organization strong and robust and allows the investment to re-energize a failing brand. The time has come for GAP to diversify. The new CEO should had strong retail ability and a progressive eye to the GAP of the future. The new entity should have more formats that leverage its core competencies of apparel production and retail. With a collection of authentic brands that speak targeted demographics GAP can rise to new heights. Though a bit… Read more »
Bill Robinson
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Bill Robinson
15 years 3 months ago
I don’t blame the Fishers for not wanting to sell. A good leader should be able to get the GAP soaring again. The first step is to focus on the brand. What really are the brand attributes of their various brands? Next, the company must strengthen their products to align the products to the brand qualities. Equally important is to tell a great story in all of the ways possible. The most important of these is word of mouth. Once these fundamental strategic issues are set. Gap must execute at all levels, driving cost out of the business, and leveraging insight to optimize wherever possible. This puts the focus on good managers and good analysts. The existing organization has 1000s of qualified people. Let them step forward and multiply. The new leadership should encourage and reward innovation, especially when empirical feedback is part of the mix. Change has always been at the heart of retailing. It’s time for the Gap to get good at change.
Santiago Vega
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Santiago Vega
15 years 3 months ago

There’s no doubt The Gap needs an experienced merchandiser and savvy marketer at the top; someone that will set a clear and consumer-relevant merchandising direction for each of the company’s brands and that will nurture talent within the organization.

I wouldn’t be surprised if the candidate came from one of Europe’s fast-fashion chains, or from the luxury sector.

Art Williams
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Art Williams
15 years 3 months ago

It sounds like they need a leader that understands their business and what drives it. You can’t achieve long-term success by fiscal measures alone; you have to increase profitable sales. Someone needs to be able to inject some life into their product development and marketing that will resonate with their customers. If a CEO doesn’t have it personally, he must be able to recruit it.

Dick Seesel
Guest
15 years 3 months ago
In today’s Wall Street Journal coverage of the Gap story, there was a telling anecdote about Paul Pressler’s role in line reviews. He acknowledged his lack of retail expertise and yet made observations at these planning sessions that left his team scrambling to “read the tea leaves” and adjust accordingly. If this story is true, there are some lessons to be learned: 1. If a CEO of an apparel company is going to lead line reviews, he or she should have apparel expertise. If not, stay out of the line review and let the merchants you’ve hired do their job. 2. Hire leaders and merchants below the CEO position (driving the Gap and Old Navy businesses, for example) that have the courage of their own conviction instead of being merely reactive to the boss’s feedback. There are some obvious strategic decisions that The Gap needs to make, about the competing positioning of its brands against each other and against discounters and “fast fashion” retailers. But most importantly, it’s about the skill set, vision and leadership… Read more »
Don Delzell
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Don Delzell
15 years 3 months ago
The critical issue to understand is that The Gap is really two distinct operations under one roof. In reality, The Gap operates as a multi-brand apparel and accessory manufacturer. The skills and talents needed to run this organization are not dissimilar from those needed at the Jones Apparel Group or Liz. Paradoxically, of equal importance, The Gap operates as a multi-channel and multi-concept retailer. This aspect of the operation requires the similar skills and abilities as those found at…well…geez…I can’t think of a retail conglomerate with a portfolio of distinct brands, each aimed at a unique customer segment, entirely dependent on own product. The retail aspects of The Gap have to be handled as independent operations. There are no real merchandising or customer service synergies between the various Gap retail brands. The back of the house, however, is where all the focus has to be. The next CEO could probably benefit from installing strong senior leadership, brand and product focused, at the helm of each division while focusing his or her efforts on the continued… Read more »
Ana-Maria Geambasu
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Ana-Maria Geambasu
15 years 3 months ago

The Gap needs to revitalize the great customer service that was their best marketing tool, and their brand image in the past. In the last 3 – 4 years, the branding image has changed to be synonymous with casual, comfortable clothing, by eliminating the boutique concept where stylish clothes were available; that move, at least in Canada, with the newcomers like Zara, Mango and M&N, has reduced their visibility within the market.

How many t-shirts do I need? However, if they are stylish, I might buy more than one.

Dean Crutchfield
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Dean Crutchfield
15 years 3 months ago
You’ll need to hire a CEO who isn’t tied to the henchmen they had at their previous place of work, especially if those henchmen have no real experience (nor passion) in retail. This was a key issue for Pressler and his first 100 days. The comparison is Drexler who just loved “product” and didn’t need the support of other outsiders because he had a vision and a passion that is perfect for lagging retail brands–it’s the product stupid. On top of this love for the product you’re going to need a CEO who recognizes that in retail it’s not just running the business by the books, but building and maintaining the closeness of the brand with the customer. Something GAP used to zealously enjoy. Gap Inc. is a multi brand, single business, business. Therefore, GAP needs a leader that understands the difference between inspect versus expect, i.e. execution is king. Big results require big ambitions, so Gap needs to get someone who is anxious to win. Someone LIKE a Terry Leahy from Tesco or WPP’s… Read more »
Mark Lilien
Guest
15 years 3 months ago

The Gap needs the same kind of leadership as American Eagle and Abercrombie & Fitch. American Eagle was $10 five years ago and today it’s $35. Abercrombie & Fitch was $30 five years ago and today it’s $80. Both successful competitors are merchandising-driven, whose styling and market positioning are pitch-perfect. They’re run by great merchants who’ve assembled high performance teams. Neither company is run single-handedly by one person, but there’s no doubt that merchandising leadership is the key. They don’t ignore finance, technology, real estate, HR, and all the other necessary functions. But they know what function is the driver that customers value more than anything else.

James Avilez
Guest
James Avilez
15 years 3 months ago

I think GAP tried to be everything to everybody; that rarely works. I have always liked GAP and Banana Republic. I can see GAP being the low end and BR being the high end–makes sense.

Then they brought out Old Navy. Why? Where did that leave the GAP division? I can go to Target and pick up a very nice t-shirt for $7.99 and at Old Navy a t-shirt goes for over $10.00 last time I checked, and the quality just didn’t compare. Target has got the clothes down as far as styling, quality and price–down to a science. My advice to any CEO would be: 86 Old Navy and really work on GAP. Old Navy was never necessary. Old Navy can’t compete with Target.

Rachel Teo
Guest
Rachel Teo
15 years 3 months ago

The company may use the concept of “The Apprentice” to source for the most suitable candidate. It should be open to anyone and everyone,with or without experience, preferably without experience. Yeah, many may disagree that we should hire those without experience. The reason why I suggested that we need to let the position opened to everyone and anyone is because there are many people out there with lots of ideas but don’t know where to put or use them. Therefore, they will go into the waste basket without knowing their potential. The most ideal proposal may come from a small kid, a janitor or even a school drop out. Why don’t you give them a try? Miracles are everywhere but it’s not magic. It takes action to bring it into reality.

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