NEW YORK, United States — Gap Inc. shares fell the most in 15 months after the company embarked on a search for a new leader of the flagship brand, citing shaky operations and disappointing profit growth.
Jeff Kirwan, president and chief executive officer of the Gap brand, will leave the company and a search is underway for a replacement, the San Francisco-based retailer said Tuesday. In the interim, Brent Hyder, executive vice president of global talent and sustainability, will oversee the unit.
Kirwan took over the Gap brand in 2014 with the chain in turmoil as sales continued to slide. He overhauled its operating model to improve the ability to test products and quickly stock designs that sold well. He also focused on improving the quality and fit of its offerings. Still, comparable sales at the chain — a closely watched measure — fell in 13 of the past 15 quarters as competition increased and shoppers shifted spending away from apparel in favour of experiences and technology.
“While I am pleased with our progress in brand health and product quality, we have not achieved the operational excellence and accelerated profit growth that we know is possible at Gap brand,” Gap Inc. Chief Executive Officer Art Peck said in the statement.
The stock declined as much as 7.6 percent to $30.75 in New York, the biggest intraday decline since November 2016. The shares had already slipped 2.3 percent this year through the close of trading Feb. 16.
Ed Yruma, an analyst at KeyBanc Capital markets, downgraded the stock to the equivalent of hold from buy, saying “we do have some concerns that issues (product, brand, perception, store fleet) with Gap banner may be difficult to fix.”
Hyder previously served as chief operating officer of the Gap brand and led all aspects of the parent company’s business in Japan.
By Lindsey Rupp; editors: Nick Turner, Lisa Wolfson and Jonathan Roeder.