Cutting Earnings Outlook, Gap Ousts Head Designer

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Gap Patrick Robinson

NEW YORK — Gap Inc. has ousted Patrick Robinson, the design director for its namesake brand. The announcement Thursday came as the clothing seller cut its first-quarter earnings outlook.

The company, based in San Francisco, says it is searching for a successor.

Pam Wallack, who became head of the newly established Gap Creative Center three months ago, made the call to dismiss Robinson and will manage the design teams in the interim.

“I’ve made the decision to make a change within our Gap adult design team,” Wallack said in a statement issued Thursday.

Robinson had been executive vice president of Gap Global Design for Adult and Body for four years.

His departure follows a series of management and organizational changes aimed at reviving sales that have long sagged.

In February, the company appointed Art Peck, who had been the head of the outlet center, as president of the Gap brand. He replaced Marka Hansen, who had been at the brand’s helm since February 2007. Peck is the fifth president to lead the Gap brand in nine years.

At that time, the retailer also announced a newly established Global Creative Center and named Wallack, who had been Gap’s president of North America, to head up the center.

The Gap brand has suffered an annual drop in a key revenue measure in North America for six straight years, including 2010. The retailer also operates Banana Republic and Old Navy stores, both of which are on the mend.

The company, once known for turning basics like T-shirts and khakis into must-have fashions, has closed or shrunk stores and cut inventory to boost its profits.

But the revolving door of executives hasn’t been able to solve the biggest issue the chain faces: Shoppers aren’t buying its clothes.

Robinson has had success with the overhaul of Gap’s jeans launched for the fall of 2009 and marketed under the 1969 brand. That was followed by a focus on black pants last fall.

But poor fit and lack of exciting fashions have hurt the brand for most of the decade. Gap has been increasingly squeezed in the middle, between cheap chic fashion purveyors Swedish retailer H&M and Forever 21 at the bottom and higher-priced options like Abercrombie & Fitch and J.Crew at the top.

“Patrick has been a dedicated and passionate advocate for Gap brand and our customers over the last four years, and we’re grateful for his hard work, especially related to our 1969 denim,” Glenn Murphy, chairman and CEO of Gap Inc., said in a statement. “Our leaders of the new Gap Global Creative Center are taking the necessary steps to compete and win around the world.”

Gap announced in late February that rising sales abroad, online and at its higher-price Banana Republic and lower-price Old Navy chains helped its fourth-quarter net income rise nearly 4 percent and made up for the Gap brand’s weakness.

In a separate announcement Thursday, the retailer said that its revenue at stores open at least a year rose 8 percent in April, helped by a late Easter.

Analysts expected a 0.8 percent decline, according to Thomson Reuters. The Gap brand had only a 2 percent increase in its North America division, trailing the 11 percent increase posted at Banana Republic and the 14 percent gain at Old Navy. The figure fell 1 percent in its international division.

But the company’s overall first-quarter revenue at stores open at least a year fell 3 percent, compared with a 5 percent increase in the first quarter last year.

Based on lower sales and squeezed merchandise profit margins, Gap lowered its earnings outlook for the first quarter, ended April 30. It now expects net income in the first quarter of 38 cents to 39 cents per share. Analysts expect net income of 40 cents per share, according to FactSet.

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