More Changes at The Gap - Is there Light at the end of the Tunnel?

The Gap GPS (NYSE), the struggling clothing retailer, is expected to announce quarterly earnings today after the close of the markets.  One potentially positive note is the new vigor and style Gap's newest designer, Patrick Robinson, has infused into the Gap's fall collection.  According to a story by Eric Wilson in the International Herald Tribune,

Robinson, 41, is the third designer to attempt to pull the sword from the stone since Gap began to publicly acknowledge its creative personnel in 2003, and the most closely watched because of his popularity with industry insiders and his finesse with casual American sportswear.

 

His fall designs have generated promising reviews, but also concern about whether a single designer - one with a mixed track record - can revive a brand with 1,155 stores in the United States in the midst of an economic crisis.

Robinson's input into design for the Gap was followed today by the company's announcement that acting President Tom Wyatt of the Gap's subsidiary Old Navy who had temporarily replaced Dawn Robertson as president back in February was formally made the President of Old Navy today.  According to the company's press release,

"In the last six months, Tom (Wyatt) unified the organization and brought renewed focus to our customer target, while making the tough changes necessary to get the brand back on track," Gap Chief Executive Glenn Murphy said.

Glenn Murphy, the Gap's CEO, has been working feverishly to find a formula that could work to turn the retailer's fortunes around.  It's tough right now, but maybe, just maybe, he has a real winner with the Gap's newest designer.  Old Navy on the other hand, is a far more difficult situation.  

Stay tuned expect more to come both good and bad.

Is Gap's New CEO a Good Fit?

Can the Gap GPS (NYSE) manage to get its mojo back with a new CEO out of retailing rather than clothing? Investors and competitors are all wondering.

Yesterday, Gap's board of directors announced the surprise appointment of Glenn K. Murphy as it long awaited new Chairman and CEO. Murphy before his appointment had been the highly successful Chairman and CEO for six years of Canada's largest drug store chain, Shoppers Drug Mart from which he left in March of this year. Murphy, an experienced retailer, has no experience in clothing. Is his expertise and executive acumen enough to turn the languishing clothing icon around? Opinions are all over the map but at a minimum at least, the Gap has finally found a new leader.

The Gap has been undergoing an extensive six month search for a new CEO. In today's New York Times an article by Michael Barbaro stated:

"According to people briefed on the search process, Gap put out feelers to several highly regarded apparel industry figures, like the chief executive of Avon, Andrea Jung, a former Neiman Marcus executive. But these executives said they had little interest in the job."

The challenge to turn the Gap around is huge and it is not for the timid. Most clothing experts are probably skeptical about Murphy's appointment. According to a piece in the Los Angeles Times by Kim Yoshino and Leslie Earnest,

Murphy's appointment was greeted with skepticism by Marshal Cohen, chief industry analyst at NPD Group, a market research firm. ...."It's deja vu all over again' he said, 'where's the beef? Where's the merchant? I need to a merchant in this. Merchandise is such a critical component of the equation.... They're running out of chances here."

There was further negative comments in TheStreet's piece when the writer asked Howard Davidowtiz, chairman of Davidowitz and Associates, a retail consulting and investment banking firm, about the appointment. Davidowitz stated,

"...he is puzzled by Gap's choice of leadership.... The people who drive companies are fashion geniuses -- the people who fall on their face are people who are not."

There are many analysts, however, who have expressed their approval of the appointment. Don't expect quick miracles. Follow the moves and statements by the new CEO as he ventures into unknown territory. He has real talent and keen executive skills, the real question is will he be able to get his clothing merchandisers to bring back the excitement and reinvent the Gap and its other brands.

For more see:

BusinessWeek Update (Nov. 23)
MSNBC Slumping Gap jettisons 1,500 workers
Seeking Alpha
Motley Fool
TheStreet update
Schaeffer's Research
Globe and Mail
Women's Wear Daily
Toronto Star
Forbes
NY Post