By  on October 20, 2005

NEW YORK — Two recent research reports took a bearish turn on Gap Inc. by questioning the leadership skills of the retailer's president and chief executive officer, Paul Pressler.

One of the reports also suggested a solution for Gap's softening sales would be to break it up. Two other analysts, however, maintained a more bullish outlook on the retailer, with one describing the negativity swirling around Gap as overstated.

In a research note earlier this month, analysts from Jennifer Black & Associates said Gap "may be on the cusp of a leadership change." The analysts also said they are not "ruling out the potential that Gap may eventually be broken up and sold in smaller pieces."

The analysts wrote in the Oct. 6 report, "We are beginning to question the leadership's ability to run a vertically integrated retailer. Currently Gap's team seems to be lacking the magic of a strong merchant, such as [former Gap president and ceo and current J. Crew Group president and ceo] Mickey Drexler."

The report, however, does not reflect Gap's Oct. 11 appointment of Charlotte Neuville as executive vice president of design and product development for the Gap brand, overseeing all aspects of product design and development for men's and women's. Neuville, who previously worked for New York & Co. Inc. for nine years and is a 20-year design veteran, replaced Pina Ferlisi, who left Gap the day Neuville's appointment was announced. Neuville's impact on the company's product offering is not expected to be seen until summer or fall of 2006.

The Jennifer Black & Associates analysts were unavailable for additional comment, but an Oct. 14 report from the firm previewing the Gap brand's holiday assortment said it "was dramatically more cohesive than what we have seen over the past few seasons."

Despite the appointment of Neuville, analyst Robert Buchanan, of A.G. Edwards & Sons Inc., said he is still not satisfied with Gap's management team. Buchanan said he would like to see a senior product person work alongside Pressler, rather than having heads of the company's three brands — Gap, Banana Republic and Old Navy — "hiring their own product heads and pretty much attacking the increasingly tough competitive set on their own."

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