By  on January 23, 2007

Gap Inc. is looking for a merchant prince to work some retail magic.

The struggling, 3,100-unit retailer on Monday pushed out Paul Pressler, its president and chief executive officer, after a failed four-and-a-half-year effort to turn it around. Gap chairman Robert J. Fisher, son of company founder Donald Fisher, has been named interim ceo and president until a successor is found.

Adrian Bellamy, an independent director and chairman of The Body Shop International, will lead a subcommittee of directors conducting the search, which also will include chairman emeritus Don Fisher; Domenico De Sole, former president and ceo of Gucci Group NV, and Bob Martin, former head of Wal-Mart International.

The management change comes as Gap Inc. is said to be mulling a variety of strategic moves ranging from selling the entire company to the possibility of spinning off one of its brands, such as Banana Republic.

However, on Monday, when Pressler's departure was announced, speculation swirled a breakup of Gap was unlikely anytime soon. "They're not going to break it up," said a source close to the company. "Right now, they're looking for someone who can turn it around. The Fishers absolutely don't want to sell."

Retailers and analysts are predicting that it would take at least a year and a half to two years to turn around the business, because it could take months to find a new ceo, even longer to devise new strategies and then at least a year to overhaul the merchandise and marketing. Stores also need to be downsized, according to many observers.

Pressler's departure comes about eight months ahead of when his five-year contract was set to expire on Sept. 25. Under the terms of the contract, Pressler was paid $1.5 million a year with an initial bonus of $885,000 and a guaranteed bonus of $1.9 million, payable in April 2004. The contract stipulates that if Pressler was terminated "without cause" prior to the end of the five-year period, he would remain a non-executive employee of Gap Inc. for 24 months receiving his base salary and health insurance, as well as bonus payments.

The breaking point for Pressler came last fall and Christmas, when Gap failed to deliver respectable results even though it mounted one of its most expensive marketing campaigns ever, beckoning shoppers to return to the stores and using iconic Audrey Hepburn imagery to sell slim pants. After declaring disappointing December figures, the company earlier this month said the board and management would reevaluate merchandising strategies, in a statement that seemed to reflect disillusionment with Pressler.

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