Respected Old Navy Executive to Exit Gap

Gap Inc. said Tuesday that the highly regarded president of its Old Navy chain would leave in the fall, continuing the exodus of top executives from the struggling apparel retailer.

The loss of Jenny Ming, who helped launch the Old Navy brand in 1994, heaps additional uncertainty on attempts by San Francisco-based Gap to reverse its sagging fortunes. Old Navy’s 970 stores and online sales provide 44% of Gap’s revenue.

“It’s definitely a blow for the Gap,” said Christine Chen, an analyst with Pacific Growth Equities in San Francisco.

Ming, 51, has been one of Gap’s brightest stars during her nearly two decades there. After working on the launch, she was named Old Navy’s president in 1998. She also played a key role in the initial development of Forth & Towne, the company’s new chain for women 35 and older.

But Old Navy and the larger flagship Gap chain have struggled mightily of late. Gap has suffered declines in 20 of the last 24 months at stores open at least a year; Old Navy logged falling or flat results in 18 of those months.

The company did not specify a reason for Ming’s departure, except to say it was a mutual decision by her and Chief Executive Paul Pressler.

“There’s a transition plan now in place, and it was the appropriate timing,” spokeswoman Kris Marubio said. Ming’s last day will be Oct. 15.

Ming, in a statement, described her time at Gap as “exciting and rewarding, particularly the past 12 years spent leading Old Navy.”

“Now the time is right for me personally, and for the brand, to make a change,” she said.

Ming is at least the seventh top executive to leave Gap in the last year.

The company, which also operates the Banana Republic chain, said it would look within and outside its ranks for her replacement.

“As we begin this transition, improving Gap Inc.’s business performance continues to be our primary focus,” Pressler said in a statement. “I remain confident in the changes we’re making in all of our brands, including Old Navy, to drive our turnaround.”

With the company having routinely missed the fashion mark, the loss of Ming poses particular challenges, said analyst Robert F. Buchanan of A.G. Edwards & Sons in St. Louis. He believes that Ming’s fashion sense is sharper than that of Cynthia Harriss, who heads the Gap division in North America.

“So arguably the strongest fashion leader of the two main businesses is departing,” Buchanan said. At the same time, he noted, the company continues to lose share to rivals such as Abercrombie & Fitch Co., American Eagle Outfitters Inc., Target Corp. and Kohl’s Corp.

“Clearly Paul Pressler needs major help when it comes to trend identification and item selection across the business, both at Old Navy and at Gap brand,” Buchanan said.

Investors did not seem particularly rattled by the news. Gap’s shares fell 28 cents, or 1.6%, to $17.29.

Although analysts have questioned how long Pressler will remain with the company, given the length of its sales slump, Chen said she believed that the board would stick with its chief.

“It seems like, based on what’s been happening, he’s probably not going anywhere,” said Chen, who owns shares of the company and maintains a “neutral” rating on the stock. “If they were going to get rid of him, I would have thought it would have been done earlier” to allow a new leader to build his or her own team.

Tuesday was a head-spinning news day for shoppers and retail workers in San Francisco, as home furnishings seller Williams-Sonoma Inc., also headquartered in the city, announced that Chief Executive Ed Mueller would retire.

“That’s big news in the world of San Francisco retail,” said Chen, who works in the city. “They’re both big management changes. And there’s a lot of crossover as far as employees.”

Hoping for stronger sales in the second half of the year, Gap is launching a TV ad campaign to promote fall products flowing into stores this month.

Some analysts have had positive reactions to what they have seen.

Chen, for one, believes that the merchandise is stronger, but she says traffic has yet to pick up because customers aren’t convinced that it has improved. “You need to reeducate the customer,” Chen said. “Traffic always lags improvement in merchandise.”

But Mark K. Montagna of CL King & Associates in New York questioned whether Ming would leave if she felt confident about the fall offerings.

“Does she foresee disappointment in the new fall merchandise?” he asked. “In which case, does she really want to continue to deal with such lackluster results going forward? It’s very stressful.”

If Old Navy’s fall offerings flop and the division has to revamp its merchandise under new leadership, the process would take at least a year, analysts said.

On the other hand, if the new items invigorate sales during the important back-to-school season, Ming could end up bowing out “on top of her game,” Montagna said, adding that she is one of the specialty apparel industry’s highest-paid executives.

Ming, whose salary is $1 million a year, will continue to be paid after leaving Gap, according to a separation agreement filed Tuesday with the Securities and Exchange Commission.

She will receive a lump sum of $500,000 on April 16 and an additional $1 million in biweekly payments thereafter until April 15, 2008.