Gap Streamlines Operations
Leading apparel retail chain, Gap Inc. (GPS), in the process of achieving superior long-term growth has created a new business structure that places the global operations of its brands under one executive. With this strategy of uniting its operations, the company expects to speed up its ability to swiftly respond to the evolving consumer needs, while expanding its world-wide presence and boosting shareholder value.
Gap announced that with the commencement of fiscal 2013, its North American, international, online, outlet and franchise divisions will be spearheaded by a single global executive for each of its brands – Gap, Banana Republic and Old Navy. Additionally, the company aims at bolstering its online presence as well as making technological advancements with the creation of a new Innovation and Digital Strategy team.
To facilitate this transition, the company made a few alterations in the existing management positions, which will be effective November 5 onwards. The company has promoted the president of Gap’s international division, Steve Sunnucks, to the position of the Global President, overlooking operations from New York. Assisting Sunnucks from San Francisco, Mark Breitbard, the senior product leader for the brand in the U.S. and Canada, will now be appointed as the President of Gap North America.
Art Peck, the current president of Gap North America, has been elevated to the position of President of the new innovation, digital strategy and new brands division.
At Banana Republic, Jack Calhoun, will assume his new role as the Global President and will focus on all channels and markets globally. He currently serves as the division’s president. At Old Navy, the company made an early start with this strategy, appointing Stefan Larsson as the Global President in April. He has assumed the new role starting this month.
Additionally, management indicated that it sees China operations as a major long term opportunity for its brands. Hence, the company has placed the China division under the direct supervision of Chairman and CEO, Glenn Murphy.
Nancy Green, presently working as the product leader for Old Navy, has been given the new role of supporting China operations. In her new role, she is empowered to channel the product assortment and merchandise for the China market.
Further, management stated that the current president of its online division, Toby Lenk, will be leaving the company following the transition in February 2013.
These changes are the result of the management shifts made in 2011 that targeted uniting the specialty and outlet divisions and also setting up the Gap Global Creative Center in New York.
Over the years, Gap’s five brands and more than 3,200 stores have spanned across over 40 countries globally, expanding significantly compared to operating in only eight countries in 2006. The company mainly competes with national and local department stores and discount stores, such as, American Eagle Outfitters Inc. (AEO) and The TJX Companies Inc. (TJX), which offer products at fire sale prices.
Gap currently maintains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. Our long-term recommendation on the stock remains Outperform.
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