Gap CEO Murphy to retire, digital head Peck to take over
Gap Inc (GPS.N) Chief Executive Glenn Murphy will retire in February and hand over the reins of the apparel retailer to its digital business head Art Peck, as the company looks to tap customers' increasing preference for online shopping.
Shares of Gap, which reported weaker-than-expected same-store sales for September, fell about 8 percent in extended trading.
Peck's appointment comes into effect on Feb. 1, Gap said in a statement. He will also join the board of the company, which owns fashion brands such as Gap, Banana Republic and Old Navy.
"I don't think there will be a massive shift in strategy going forward," Morningstar analyst Bridget Weishaar told Reuters.
Peck, 58, joined Gap in 2005 after more than 20 years at Boston Consulting Group. He headed Gap's North America business, which accounts for more than three-quarters of its revenue, in 2011 and 2012.
"I think he has the relevant experience necessary to continue to execute on ongoing strategic initiatives, including global expansion, digital and margin expansion," Weishaar said.
Gap has been looking to reduce its dependence on the highly competitive North American market. The retailer said in August that it would open 40 stores in India as part of its plan to expand in emerging markets.
The company had 80 stores in China at the end of 2013. "We'll have 110 stores in the country by the end of this year and we predict China can become a billion-dollar market for Gap in the coming years," Peck said on a conference call.
Murphy, 52, took over as Gap's CEO in July 2007. Since then, Gap's market value has nearly tripled.
While the company's earnings have risen 54 percent in the period, revenue growth has been relatively disappointing at 2.4 percent.
Gap also said Bob Fisher, an independent director with a 35-year history with the company founded by his parents, would become the non-executive chairman of its board.
The company reported flat same-store sales for September, hurt by weak sales in its Gap brand. Analysts on average had expected a rise of 1.1 percent, according to Thomson Reuters.
The apparel retailer said weak sales in the Gap brand were expected to hurt margins in the third quarter.
Gap's shares were at $38.60 in heavy trading after the bell. Up to Wednesday's close, the stock had risen about 7 percent this year.
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