Gap names drugstore exec as its new CEO
Apparel retailer Gap Inc., which has suffered sinking sales and a shake-up of its top management, named a Canadian drugstore executive as its new chief executive Thursday.
Glenn Murphy, 45, has been CEO of Shoppers Drug Mart, Canada’s largest drugstore chain, since 2001. Although he has 20 years of retail experience in food, books, and health and beauty, he has never before worked for an apparel company.
Gap, the San Francisco-based operator of more than 3,100 Gap, Old Navy and Banana Republic stores, is struggling to wrench itself from an extended sales slump.
It has been searching for a CEO since January, when it ousted Paul Pressler, former head of Walt Disney Co.’s theme parks and resort division, who was criticized for having limited retail experience and for not having a knack for apparel merchandising.
Murphy’s appointment was greeted with skepticism by Marshal Cohen, chief industry analyst at NPD Group, a market research firm.
“It’s deja vu all over again,” he said. “Where’s the beef? Where’s the merchant? I need to see a merchant in this. Merchandise is such a critical component of the equation.... They’re running out of chances here.”
After Pressler was ousted, Gap vowed to find a replacement with a strong background in retailing and “merchandising experience, ideally in apparel.”
But it has become increasingly difficult to find strong merchants, retail experts say. And it’s hardest for large businesses that need leaders with a complex set of skills to efficiently run a business, spark creativity and unify workers.
The company saw its fiscal first-quarter profit drop 26% from a year earlier. Net income for the quarter, which ended in May, was $178 million, or 22 cents a share, compared with $242 million or 28 cents, in 2006.
There are more than 1,000 outlets in the Shoppers Drug Mart chain, generating sales of $7.8 billion last year.
Gap officials said they selected Murphy after a “rigorous” search process.
“The entire board unanimously agreed that we’d found the right leader for our company,” said independent Gap director Adrian Bellamy, chairman of the Body Shop International.
Bellamy noted Murphy’s “proven retail skills” that have yielded positive financial results. While at the helm of Shoppers Drug Mart, revenue increased for 22 consecutive quarters and its earnings per share doubled.
Gap, on the other hand, has seen profit slip six quarters in a row and store sales have either dropped or held steady nearly every month for the last three years.
Murphy was not available for an interview, but said in a statement: “Alongside some of the most talented people in the apparel industry, we’ll work to reestablish each brand’s leadership position and set the company along a path of sustained earnings performance.”
Chairman Robert J. Fisher, son of the company’s founders, has been serving as interim CEO since Pressler left. Murphy is expected to join the company next week. His compensation includes a $1.5-million annual salary, $1-million signing bonus and annual performance-based bonuses targeted at 150% of his salary. His estimated compensation for 2008 is $12 million.
Shares of Gap climbed 34 cents to $17.25 in extended trading. It closed at $16.91, down 77 cents in regular trading.
leslie.earnest@latimes.com
