Gap Inc. Leadership: Attempts to Combat Declining Sales

Since founding the company with his wife Doris Fisher in 1969, Donald Fisher has been at the helm of Gap Inc. leadership serving as CEO until 1995 and Chairman of the Board until 2004, and as company director and Chairman Emeritus until his death in 2009. Millard “Mickey” Drexler served as GAP CEO from 1995 until 2002 and he is credited for transforming the company into a global brand. It has been noted that “Drexler possessed the fashion instincts that built the Gap brand and image into a destination for multiple target customer groups”.[1]

Drexler was forced to resign in 2002, following the decline of sales and a loss of USD 7.7 million in 2001. Paul S. Pressler from Disney was named as the new CEO due to his reputation as operations wizard to restore discipline to the floundering company.[2] Failing to appreciate the nuances of the fashion business Pressler oversaw a further decline in sales and brand image.

Currently, GAP’s senior management team is led by CEO Art Peck and he is focused on executing the company’s strategy to engage customers and maximize shareholder returns. Today, Gap leadership is faced with a serious challenge of declining sales and profitability. Net sales for fiscal 2015 decreased 4 percent to USD 15.8 billion compared with USD 16.4 billion for fiscal 2014. Gross profit for fiscal 2015 was USD 5.7 billion compared with USD 6.3 billion for fiscal 2014.[3] This is the outcome of the brand using its perception of ‘coolness’ along with a set of other issues.

Despite the complexity of the current situation for Gap Inc., there are optimistic views that CEO Art Peck may be successful in turning around the business partially due to his experience of two decades in management consultancy. Moreover, Mr. Peck is credited with the development of franchise strategy for the business.

CEO Art Peck reshuffled Gap Inc. leadership as a part of his attempt to turnover the business. The most notably, top executive changes include the demotion of Ms. Marissa Webb from the role of creative director of Banana Republic following the decline of sales for the seventh time in eight months by September 2015.[4]

Gap Inc. Report constitutes a comprehensive analysis of Gap Inc. business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Gap Inc. Moreover, the report contains analyses of Gap Inc.’s marketing strategy and discusses the issues of corporate social responsibility.

[1] Joslin, R., Lueck, P., Martino, C., Rhoads, M., Watcher, B., Chapman, R. & Christian, G. (2009) “Gap, Inc.: Has the Retailer Lost Its Style? Arizone State University

[2] Lee, L. (2007) “Paul Pressler’s Fall From The Gap: Hailed on his arrival, the former CEO is now viewed as the wrong guy at the wrong time” Bloomberg, Available at: http://www.bloomberg.com/news/articles/2007-02-25/paul-presslers-fall-from-the-gap

[3] Annual Report (2015) GAP Inc.

[4] Gap September Sales Decline Poses Challenges For CEO (2015) Business Finance News, Available at: http://www.businessfinancenews.com/24863-gap-inc-september-sales-decline-poses-challenges-for-ceo/