Who Will Be Gap’s Next President?

The hot item in retail this season isn’t a fall fashion. It’s a job.

As the search gets underway for a new president for Gap Inc.’s namesake division, a “how about so and so?” list is emerging that includes some well-known Southern California retail executives.

Hot Topic Inc. Chief Executive Betsy McLaughlin’s name is bandied about, as is that of Greg Weaver, the boss at Pacific Sunwear of California Inc.

Greg Scott’s name pops up, although he’s barely gotten settled at Bebe Stores Inc. after bolting from Wet Seal Inc., where he was president of the Arden B. division.

Former Gap brand design chief Jerome Jessup, now a vice president of merchandise and design for AnnTaylor Stores, makes the list, as does Katherine Krill, president of that company’s Ann Taylor Loft division.

It’s not surprising that the search for outgoing Gap U.S. brand chief Gary Muto’s successor has incited speculation among industry insiders and Wall Street analysts.

For the nation’s largest specialty apparel company, it will be the most crucial new hire since former Disney executive Paul Pressler was named chief executive two years ago. Gap’s namesake division generated about 40% of the company’s 2003 revenue of nearly $15.9 billion, and finding a new leader is Muto’s top priority, spokeswoman Stacy MacLean said.

The post also is a high-profile and high-paying position -- the 45-year-old Muto’s salary and bonus last year amounted to nearly $1.8 million -- that is certain to interest a wide range of executives in the retailing industry and beyond. The Gap brand carries the heft to attract celebrities such as Madonna and former “Sex and the City” star Sarah Jessica Parker to its ads, and in the past has been a fashion trendsetter.

“It would be a plum job for anyone,” said John Morris, an analyst with Harris Nesbitt Gerard.

So far, Gap and its search firm, Egon Zehnder, are remaining mum about who’s on their radar, and no names have surfaced of people who’ve actually been contacted about the job.

Noting the speculation surrounding the search for Muto’s successor, one expert pointed out that Pressler, 48, wasn’t seen as a leading candidate to become CEO of Gap.

“It’s rarely, or maybe never, that somebody speculated [about] ends up landing the job,” said Hal Reiter, chief executive of Herbert Mines Associates, the New York search firm that tapped Pressler for the Gap job.

That hasn’t stopped the guessing game among Gap watchers.

Besides McLaughlin and Weaver, both of whom said they had no plans to leave their current jobs, and Krill and Jessup, neither of whom could be reached for comment, former Wet Seal CEO Kathy Bronstein is mentioned as a possible candidate. Some insiders think Gap might try to woo Jennifer Pritchard, who took over the Arden B. chain after Scott left.

Pritchard couldn’t be reached for comment and Bronstein said Gap hadn’t dialed her number.

Some experts say Gap should fill the slot with someone with solid experience in apparel retailing and a gut feel for clothing, rather than hiring another leader in the tradition of Pressler, who is known for his prowess in marketing and consumer research.

At Walt Disney Co., Pressler oversaw the rapid build-up of Disney’s retail chain, tripling its number of stores to 335 during his three-year watch. But the chain didn’t live up to Disney’s profit goals and was eventually sold. He went on to run Disneyland and later the company’s strategically important theme-park unit.

“I think the central question here is: Will Paul Pressler hire the right person to assist him in this key area of the business that he, frankly, doesn’t know all that much about?” said Robert Buchanan, an analyst with A.G. Edwards & Sons.

One potential obstacle to landing a top name: Some experts say it’s unlikely that a chief executive would be willing to take a step down the corporate ladder to take a post as president, although others say it can happen if the shift involves moving to a much larger company like Gap.

However it ends, the search comes at an important time for the San Francisco company, which oversees 3,000 Gap, Old Navy and Banana Republic stores. After seven straight quarters of earnings growth, Gap suffered a 7.2% drop in profit in the fiscal second quarter of 2004 on slow store traffic and a one-time charge. Same-store sales -- important because they include only stores open a year or more -- were flat in the quarter and slipped 1% last month.

“I would call it a critical hire,” said Kirk Palmer, owner of the executive search firm Kirk Palmer & Associates, which specializes in retail. “Their future success is tied not only to new growth concepts but also to their ability to manage their more mature businesses.”

Some investors are growing impatient. Gap’s stock is down 17% this year, while an index of 38 retail stocks is up almost 4%. Gap shares fell 44 cents Friday to $19.35 on the New York Stock Exchange after Wachovia Capital Markets downgraded the stock to “market perform” from “outperform,” citing the division vacancy as one concern.

Gap’s MacLean said the company was looking for a leader with broad operational and management skills, experience in consumer products and a “strong creative sensibility.”

Headhunter Egon Zehnder is a generalist when it comes to recruiting -- it doesn’t specialize in retailing. And Gap isn’t likely to promote somebody who’s already on its payroll, MacLean said.

“We definitely are not limiting our search to the retail industry and we also are not limiting the search to candidates with specific merchandising experience,” MacLean said. “We’re looking everywhere, really.”