Management Turnover as Change Agent

Wednesday, December 12, 2007

Update on The Gap

Back in July, The Gap GPS (NYSE) made a surprise CEO appointment. The company picked Glenn Murphy, a successful drugstore executive, as its new CEO. Prior to Murphy's appointment, The Gap was often being written off by many analysts and investors. It could be that Murphy may turn out to be a super appointment.

The Gap has managed to surprise many lately. According to a story today by Heather Burke for Bloomberg entitled, Gap First Holiday-Quarter Profit Gain Since '05 Signals Rebound, the company,
By refusing to join competitors making early-holiday markdowns, the biggest U.S. clothing retailer may post a fourth- quarter profit gain for the first time since 2005.
... After two years of declining sales, San Francisco-based Gap has cut inventory at its namesake brand to avoid having to slash prices on $98 cashmere sweaters and $148 tweed coats in what may be the slowest Christmas shopping season in five years.
The article points specifically to Gap's brand president, Marka Hansen, as the key behind the change but Murphy is close by. The article went on to point out,
Of 25 analysts who follow Gap, 12 recommend buying the shares, 11 say to hold them and two say to sell, according to data compiled by Bloomberg.
Keep a close eye on the steps The Gap follows to continue its potential comeback.

No comments: