Retailer’s New CEO Faces a Huge Task

Paul Pressler had a tough job at Walt Disney Co. He faces an even tougher one at Gap Inc.

San Francisco-based Gap, the nation’s largest specialty retailer, has suffered through more than two years of fashion and financial missteps, going from huge profits to losses.

Pressler, who led Walt Disney’s $6-billion theme parks and resort division that was struggling amid the downturn in tourism, must now find a way to regain customers who have given up on Gap.

“It’s by no means going to be a walk in the park for Paul Pressler or Gap,” said Todd Slater, an analyst with Lazard in New York. “The company grew too far, too fast, then hit a wall and has some complex structural issues to correct.”

Pressler was named Thursday to replace retiring Gap Chief Executive Millard “Mickey” Drexler, who led the company for two decades.

Pressler, 46, made his name in consumer products, and at Disney, he rose through the ranks to run a complex, global organization. Investors welcomed his arrival, sending Gap shares up 46 cents, or 3.8%, to close at $12.45 on the New York Stock Exchange.

Before taking over Disney’s theme parks, Pressler oversaw Disney Stores. There, he more than doubled the number of outlets in three years, to 335 in eight countries.

At Gap, Pressler inherits Drexler’s blue-chip franchise of more than 4,200 Gap, Banana Republic and Old Navy stores worldwide. But after leading white-collar America in its shift from business suits to workplace casual chinos and sweater sets, Drexler’s heralded sense for matching merchandise to consumer trends slipped.

Old Navy and Gap--the parent company’s biggest brand--lost ground as they veered from offering classic khakis for the family to form-fitting fashion for teens.

“At this stage in my career, it was an opportunity to lead what I also think is a fantastic brand,” Pressler said of his new employer. “They have 165,000 employees around the world. This is an opportunity that comes around once in a lifetime.”

Pressler will earn an annual salary of $1.5 million, with a starting bonus of $885,000. He also was guaranteed a minimum bonus of almost $1.9 million in 2003. In addition, he was given an option grant of 5 million shares, which vest over the next seven years.

Gap spokesman Alan Marks said company founder Donald Fisher will maintain his position as chairman but will recommend that Pressler be appointed to the board of directors.

Gap’s net income slipped from $1.1 billion in fiscal 1999 to a net loss of just less than $7.8 million in fiscal 2001.

At Disney, Pressler had limited retail experience, with mixed results. His tenure at Disney consumer products and stores coincided with the heyday of Disney merchandise, but in recent years Disney has been forced to close many of the stores.

Despite his experience with the stores, he is not seen as a retailer, said analyst Bob Buchanan of A.G. Edwards in St. Louis.

“He didn’t grow up as a merchant, so the people who built their careers in retailing may or may not listen to him,” Buchanan said.

At Gap, Pressler is “coming in at a tough time,” Buchanan said.

“The air is going out of the sales balloon for the industry, and right now Gap amounts to just another high-cost provider that has lost its way.”

Although Gap shares have fallen more than 75% since a February 2000 high of more than $53, some on Wall Street were dismayed in May when Drexler, who has successfully steered the company through rough patches before, announced his retirement plans.

Still, many on Wall Street said Pressler--whose name has been bandied about over the years as leadership positions became available at companies as wide ranging as Target Corp. and Mattel Inc.--is uniquely qualified to take over.

“I think this will be a wonderful thing for the Gap,” said Comcast Cable Co. President Steve Burke, who launched and ran Disney Stores until Pressler took over. “Paul has a very unique combination of business expertise and a real creative spark.”

In Anaheim, Pressler was charged with stretching Disneyland into a more alluring tourist resort where people would want to stay more than a day.

His management of the $1.4-billion Disney Resort expansion prompted $3 billion in public spending to spruce up the areas around the park and make other improvements in Anaheim, including enlarging the Anaheim Convention Center.

“All those things will serve well at the Gap organization,” said Ellen Schlossberg, a Gap analyst at William Blair in Chicago. “It seems like this has the potential to be a good fit.”

Still, Disney’s California Adventure has never reached its original target capacity of 30,000 guests in one day. Critics, who sometimes blamed Pressler for the oversights, said there was a dearth of attractions for younger children and too much emphasis on retail and high-end restaurants.

Pressler had responded by announcing new attractions to be opened within the next two years. But two restaurants already had pulled out of the park, and many worry that the slow start has tainted the park’s reputation.

At Gap, however, Schlossberg notes it is Pressler’s global consumer products and brand management experience that Wall Street finds encouraging.

And as a result of changes already enacted, Gap’s position is somewhat improved.

Sales in stores open at least a year have been on the upswing since June, and the company has launched a series of marketing campaigns to drive traffic into stores, including a newspaper circular for its value-priced Old Navy stores.

“He could be walking in at a great time,” Schlossberg said. “Mickey has worked through and positioned the company for a turnaround.”

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Paul S. Pressler

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Pressler, a Long Island, N.Y., native, received a BA in economics from the State University of New York at Oneonta in 1978.

* 1998-present: President, then chairman in 2000 of Walt Disney Parks and Resorts.

Highlights: Oversees Disney’s worldwide theme parks, 22 hotels, cruise line, Walt Disney Imagineering, ESPN Zone restaurants, the Anaheim Angels and the Mighty Ducks. Became interim president of Anaheim Sports in January.

* November 1994D1998: President, Disneyland parks and hotels. Highlights: Led Disneyland expansion, including California Adventure and Downtown Disney.

* July 1994-November 1994: President, Disney Stores

* 1992-1994: Executive vice president and general manager, Disney Stores. Highlights: Expanded division from 160 stores to 335 worldwide.

* 1990-1992: Senior vice president, consumer products

* 1987-1990: Senior vice president, Disney licensing

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1982-1987: Vice president, marketing and design, Kenner-Parker Toys

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Source: Times research