Chief executive of Gap is out


New York: For the last two weeks, Robert Fisher, the son of Gap's founders and the board's chairman, conducted a series of secret conference calls with fellow directors.

On Friday, Fisher delivered the board's decision to Pressler: He was out. The 50-year-old former Disney executive did not put up much of a fight, said a person briefed on the matter.

On Monday, Pressler stepped down after Gap's third dismal holiday shopping season, in what the company described as a "mutual" decision. The move was widely expected on Wall Street, where investors had begun calling for his removal more than a year ago. He is eligible for a severance package worth $14.5 million, the company said.

With Gap's board weighing the sale of the troubled company, Pressler's departure cleared the way for potential buyers to install their own chief executive.

But this person said that Drexler, whose runaway success at J. Crew has haunted Gap's board, told the investment firms that he had no interest in returning to Gap.

Gap said it was searching for a new chief with "deep" retail experience — an apparent jab at Pressler, who had little — and speculation immediately fell upon industry heavyweights like Roger Farah, president of Polo Ralph Lauren, and Paul Charron, former head of Liz Claiborne. For now, Fisher will fill the post.

Pressler, who once ran Walt Disney's theme parks, arrived at Gap in 2002 with bold plans to cut costs and restore the chain's place in the retail firmament after years of sluggish sales.

He slashed Gap's heavy debt, but it quickly became clear that he could not turn around the retail business. He inherited an ambitious expansion program that left Gap with too many stores and a strategy of appealing to younger shoppers that moved the chain away from its casual clothes.

With his emphasis on testing products, through focus groups and computer models, Pressler immediately clashed with the chain's clothing designers, who managed by instinct under Drexler. In one meeting that employees said epitomized his tenure, Pressler told designers to "put together a focus group on graphic T-shirts," according to people who attended it, who spoke on condition of anonymity.

"Designers see the future, they do not respond to focus groups," one attendee said later.

But under Pressler, these people said, such data motivated a dizzying number of changes to fashions and store layouts, leaving consumers more confused than ever.

There were puffy jackets one season too late and five shades of green hoodies on the same rack. Sales fell every month for the last year and the chain resorted to discounts like $100 off a fur- lined parka this autumn.

During the holiday season, in what was widely regarded as Pressler's last chance to save his job, Gap returned to the simple fashions, like T-shirts and hooded sweaters, that fueled the chain's meteoric rise in the 1990s. But sales at stores open at least a year fell 8 percent.

Soon after, the board hired the investment bank, Goldman, Sachs, to investigate the potential sale of the company, said people briefed on the matter. It would be one of the largest buyouts ever in the retail industry. Gap's market value is more than $16 billion, and analysts expect that the company would bring more than $18 billion.

Several groups have expressed interest in buying Gap, but the board, which is filled with several members of the Fisher family, favors keeping control of the company.

Rumors of Pressler's impending ouster became so persistent in the last year that Gap's founder, Donald Fisher, issued a statement last year confirming his support for the chief executive.

Still, analysts had nicknamed him "dead man walking" over the last year and openly predicted that he would not last through the end of 2007.

They were right. "They finally did it," said Jennifer Black, a retail analyst who runs a firm by the same name. "Four years was enough."

Source:Michael Barbaro and Andrew Ross Sorkin