By  on June 6, 2007

SAN FRANCISCO — Acknowledging the challenges facing Gap Inc., interim president and chief executive officer Robert Fisher sought to reassure shareholders Tuesday that the specialty retailer was taking steps to turn around falling profits and provide new leadership.

Fisher, who also is the board chairman and took over in January after Paul Pressler was forced out, said during the annual meeting at company headquarters here that Gap was striving to be "more nimble and be able to compete.''

Without providing specifics during the sparsely attended 15-minute session, Fisher outlined several goals, including reducing costs and streamlining the business, recruiting top talent and stabilizing sales at Gap and Old Navy stores.

"The simple fact is, we need to know our customer," Fisher said of a retail tenet that in the last couple of years has alluded the brand.

Fisher said the Gap division was concentrating on a core customer between the ages of 24 and 34 years old, "with the late 20s as the sweet spot." Previously, the Gap also targeted shoppers as young as 18, a spokeswoman said. At Old Navy, the company is defining the core adult customer as being "twentysomethings," instead of starting at 18. Children's apparel also continues to be a major focus.

Only a dozen or so shareholders heard Fisher describe 2006 as "a challenging year.'' His parents, company founders Donald and Doris Fisher, sat in the front along with the 12-member board. The executives were not asked any questions.

The Gap has blamed its struggles partly on mistakes in its product mix in a retail climate where fast fashion is booming and the concept of basics in a wardrobe (an idea the company helped invent) has somewhat fallen by the wayside.

Last month, Gap reported a 26 percent decline in net profits for the first quarter ended May 5. Net income for the quarter fell to $178 million from $242 million in the same period last year, while sales gained 3.5 percent, to $3.56 billion from $3.44 billion. Same-store sales declined 4 percent. Earnings per diluted share dropped to 22 cents from 28 cents a year earlier.

Fisher said the search for a permanent ceo was under way with the help of executive search firm Egon Zehnder International.Last month, the company named Patrick Robinson, the former artistic director of Paco Rabanne, to oversee all elements of design for women's and men's apparel, accessories and intimates lines in North America as executive vice president of design for Gap Adult and GapBody.

Among the board members are executives with impressive track records: Domenico de Sole, former president and ceo of Gucci Group, and Bob Martin, who retired from Wal-Mart in 1999 after launching the international unit in 1993.

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