Gap Inc. reported today that online sales increased 5.4% year over the year in the third quarter, as total sales fell slightly. The company also announced changes in leaderships at two of its big brands, Gap and Banana Republic.

The apparel retail chain said web sales totaled $621 million in its fiscal third quarter ended Nov. 1, versus $589 in the year-ago quarter. Total sales were essentially flat at $3.972 billion in the current quarter versus $3.976 billion in the same quarter a year earlier. Taking out e-commerce, store sales declined nearly 1.1% in the quarter.

Comparable-store sales declined 2%, Gap reported, with the biggest falloff in the Gap Global unit, which was down 5%. Banana Republic was flat and Old Navy up 1% versus the same quarter a year ago.

While e-commerce fared better than store sales, CEO and chairman Glenn Murphy told analysts today he was not happy with the results online. “Brand presidents had a lot of conversation about that 5% growth,” Murphy said. “We’re on it, and changes were made to make sure we get back to gaining share online.”

Those changes include additional steps to tie together Gap’s web and store properties. The company said it is launching its reserve online, pick up in store program at nearly all its 92 Athleta stores. Already in place at Gap stores, consumers can reserve a garment online and pick it up within two days at a nearby store.

Gap also announced that consumers can order from online inventory from some 1,000 U.S. Gap, Banana Republic, Old Navy and Athleta stores. The retailer also has introduced free Wi-Fi in 1,100 Gap, Gap Factory, Banana Republic, Banana Republic Factory, Old Navy and Athleta stores in the United States, making it easier for consumers to use their mobile devices to access web sites in those stores.

Murphy said he sees a greater opportunity to increase sales from making it easy for store employees to order from companywide inventory than the reserve-in-store option. That’s because, he explained to analysts, on average seven out of 10 visits to an apparel store end with the shopper not purchasing anything. And about one in 10 of those times the shopper is leaving because she can’t find the item she wants in her size or preferred color.

“Order in store is intended to change that paradigm,” Murphy said. “Exposing the full assortment to a customer in a physical location is a huge opportunity.”

Murphy also said Gap was moving to integrate its store and online inventory, a step it’s already taken in China and some other international markets. That will enable the retailer to direct inventory to where there is the greatest demand—and willingness to pay full price—be it bricks-and-mortar stores or online. As part of that plan, he said Gap had expanded a distribution center in New York that served stores to also handle online orders in the Eastern part of the country, allowing Gap to fulfill orders in that region more quickly. He said Gap also has online distribution centers in Columbus, OH, and Phoenix.

Gap also announced changes at the top of two of its brands. Jeff Kirwin, who has been president of Gap Greater China, will take over as global president of the Gap unit in December, succeeding Stephen Sunnucks, who will leave the company Dec. 19 after a decade of leading the Gap brand. In addition Andi Owen, head of the Gap Outlet division, will become global president of Banana Republic. She will replace Jack Calhoun, who will leave the company Feb. 1 after eight years as chief of the Banana Republic brand.

The company noted in a release that the changes “were orchestrated by Art Peck as he prepares to take on the role of chief executive officer of Gap Inc. in February, with the full support of current chairman and chief executive officer Glenn Murphy.” Gap announced last month that Peck, who had led Gap’s digital initiatives, would succeed Murphy as CEO on Feb. 1.

For the fiscal third quarter ended Nov. 1, Gap reported:

• Online sales increased 5.4% to $621 million from $589 million in the same period a year earlier.
• Total sales decreased 0.1% to $3.972 billion from $3.976 billion.
• Net income increased nearly 4.2% to $351 million from $337 million.

E-commerce accounted for 15.6% of total sales in the quarter, versus 14.8% a year earlier.

For the first nine months of its fiscal year, Gap reported:

• Based on this and previous earnings releases, e-commerce increased 9.4% to $1.711 billion from $1.564 billion during the first nine months of the previous fiscal eyar.
• Total sales increased 1.3% to $11.727 billion from $11.573 billion.
• Net income of $943 million, down 3.1% from $973 million.

The web accounted for 14.6% of total sales for the first nine months of the fiscal year, compared with 13.5% a year earlier.

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