Gap chief opts for retirement

By Lorrie Grant
USA Today

Millard Drexler, CEO and president of struggling Gap, yesterday announced his retirement after 19 years at the helm.

Drexler, the retailing guru who steered the Gap to No.1 among specialty apparel chains and then saw it slide in the past two years, has been unsuccessful at turning the company around. He will leave the 3,000-store chain, which operates the Gap, Old Navy and Banana Republic brands, as the board names a new CEO.

Drexler, 57, heralded as one of the industry's foremost merchandisers, built the chain around the "Gap look" — updated casual basics such as khakis, jeans, cotton tops, and oxford shirts.

But a string of fashion misses in recent years left the company struggling as loyal customers rejected the more trendy offerings and it failed to attract new patrons.

Drexler brought on most of his deputies, but none has been tapped to succeed him. A company spokeswoman says the search will be strictly external. Retail analyst Emme Kozloff of Sanford C. Bernstein applauded that move: "If 'Mickey' Drexler can't fix it, no one inside can fix it."

Says Gap Chairman Donald Fisher: "The board will be looking for someone with broad experience and leadership skills to move us forward, create sustainable growth for Gap, Old Navy and Banana Republic, and drive long-term shareholder value."

The search could take months, recruiters say, and it won't be easy.

"It will be tedious and involved because this is a huge company that creates fashion and dominates a market segment," says Bob Kenzer, chairman of executive search firm Kenzer.

Further, Gap's now-serious sales and credit issues require skills in finance, as well as fashion. While many apparel retailers suffered in the slowing economy, Gap has posted a 24-month string of comparable-store sales declines — most double-digit losses.

Earlier this year, three major credit-rating agencies downgraded Gap's bonds, based on the declining comparable-store sales and profitability, as well as concern about how soon the company's "back-to-basics" merchandising strategy would catch on.