Gap CEO Continues to Show Promise - Update 2

Todd Sullivan, a financial blogger, wrote a piece that appeared in today's Seeking Alpha that rightfully praised efforts by Glenn Murphy, the new CEO of troubled retailer The Gap GPS (NYSE), to turn the company around. Murphy put together a plan, and up to this point, has managed to execute it quite successfully.

Back when Murphy was first appointed in July of last year, many analysts raised doubts on his selection due to his lack of retail clothing expertise, I on the other hand was quite positive about the selection. While it was true, Murphy had little retail clothing expertise, he managed in his previous position as CEO of Shoppers Drug Mart in Canada to demonstrate an uncanny talent for running a successful business that relied on merchandising and retail expertise. Murphy still has a long way to go with the Gap, especially in this difficult retail environment, but he deserves praise for his efforts and results so far.

Stay tuned.

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Investopedia

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