No longer the khaki king of the ’90s, Gap Inc. has been in need of an overhaul for a very long time—and Art Peck won’t be the one to deliver it after all.
Gap, No. 28 in the Internet Retailer 2019 Top 1000, fired its CEO late Thursday after his turnaround efforts failed to reignite sales growth, with disappointing third-quarter performance. The apparel company that includes the namesake Gap brand, Athleta and Banana Republic brought back a member of the founding family to lead the company while it figures out a longer-term plan.
Peck’s termination comes after years of struggles at the company. But many of its problem areas aren’t even unique in today’s difficult retail environment: relying on routine 50% discounts and maintaining a major presence in declining American malls.
“It was probably the most overdue management change that we’ve seen in a while,” says Stacey Widlitz, president of SW Retail Advisors. “There comes a point and time when you can’t sit and do the same thing over and over again.”
After a brief transition, Peck will exit the president and CEO role and vacate his post on the retailer’s board. Robert Fisher, the company’s current non-executive chairman and son of Gap co-founders Don and Doris Fisher, will step in as president and CEO on an interim basis. The company declined to comment beyond the press release announcing Peck’s departure.
Gap said in a statement that company-wide comparable sales appeared to be down 4% in the third quarter, which ended Nov. 2, with that measure falling 7% at its namesake brand. That’s even worse than analysts surveyed by Consensus Metrix had been expecting.
“This was a challenging quarter, as macro impacts and slower traffic further pressured results that have been hampered by product and operating challenges across key brands,” Teri List-Stoll, executive vice president and chief financial officer, said in the statement announcing Peck’s exit.
The apparel company needs to find a way to sell more goods at full price and figure out a way to capture a new, younger consumer base, Dana Telsey, CEO of Telsey Advisory Group, said on Bloomberg Television. “If you don’t have the right product, you aren’t able to sell goods at full price,” Telsey said. “There’s work to be done on the core product.”
Peck, a former consultant, tried shaking up leadership and experimenting. But sales kept declining and the business declined to the point that the company decided to spin off Old Navy, its best-performing division and the motor for the company’s sales in recent years. The company didn’t even attach an official name to its new venture when it announced the separation in February—instead referring to it as NewCo.
Old Navy, which had anchored its parent company for years, was given to Sonia Syngal to shepherd. Peck was left saddled with Banana Republic, mired in a sales slump, and the aging namesake Gap brand. He’s tried to position the Athleta chain—a Lululemon Athletica Inc. (No. 82) competitor—as the bright spot within the portfolio he would run, but it hasn’t been enough to turn things around.
“Gap is a company that clearly needed a change. Peck wasn’t moving the needle, except moving it backwards,” said Craig Johnson, president of retail researcher firm Customer Growth Partners. “It’s still a company that has great brand equity, but its residual brand equity that needs to be updated.”
In other ecommerce news:
- Home decor retailer Pier 1 Imports Inc. (No. 121) appointed Robert Riesbeck as CEO. Riesbeck also will continue to serve as chief financial officer. Cheryl Bachelder, who served as interim CEO since Dec. 2018, has stepped down from that role to continue in her position as a member of Pier 1’s Board of Directors. Riesbeck joined the home goods retailer in July 2019, after serving as chief financial officer at women’s plus-size retailer Fullbeauty Brands Inc. (No. 105) and chief financial officer and CEO at hhgreg Appliances Inc. (No. 274). Pier 1 also appointed Donna Colaco as president of Pier 1 after Douglas Diemoz stepped down from his role. She has served as executive vice president and chief customer officer since Dec. 2018. Colaco will continue to be responsible for merchandising, planning and allocation, marketing, ecommerce and promotion.
- The Amazon.com Inc. (No. 1) executive who oversaw the company’s push into bricks-and-mortar retail and development of the Kindle e-reader plans to leave early next year, the company confirmed on Friday. Steve Kessel, one of Amazon’s longest-serving and most important executives, told his team of the move in an internal email. His planned departure was reported earlier by technology news site GeekWire. “It’s hard to leave something I’ve loved doing for so long, inventing alongside a fantastic group of people, but it’s a good time to make this change because of the teams and plans we have in place,” Kessel wrote in the email obtained by GeekWire.
- Online personalization vendor Coveo Solutions Inc. raised $227 million from OMERS Growth Equity and other investors, including Evergreen Coast Capital, FSTQ and IQ, brings Coveo’s funding to date to $339.8 million. Coveo says it will use the funding to reach more online companies with its artificial intelligence-powered, internet-hosted technology designed to personalize web content based on a mix of customer purchasing intent and available inventory.
- Incode, which provides secure biometric products for banking, payment and retail industries, raised $10 million in a seed round to fuel the growth and adoption of its Incode Omni platform. Its platform is an omnichannel biometric identity platform with services such as authenticating identities and making payments across any channel. For example, its “Incode Hello” service allows users to log in to web, Android and iOS apps with their face, while “Incode Check” allows a customer to verify online purchases and transactions with only their face.