By and  on January 17, 2002

NEW YORK -- In a dramatic move to revive its flagging performance and set up a succession strategy, Gap Inc. on Wednesday said it has launched a search for a new president of the Gap brand. Whoever gets selected will be a primary contender to one day succeed Millard Drexler, president and chief executive officer of Gap Inc.

Ken Pilot, who has overseen the Gap brand in the U.S. and overseas as president of the division, Wednesday was shifted back to running Gap International. The move represents a reversal of Gap's earlier decision to combine the U.S. and overseas operations into one and put Pilot at its head. Drexler now will head Gap in the U.S. until a new president is found. At one time, Pilot was a rising star and was even among those considered a potential Drexler successor.

Gap Inc. said it's forming separate Gap U.S. and International divisions to create a sharper focus on improving performance at its flagship brand. At Gap International, Pilot will continue reporting to Drexler.

"We've operated Gap brand as a single global organization for almost two years," Drexler said in a statement late Wednesday. "While that approach created some benefits, Gap faces challenges and opportunities in our U.S. and International markets that demand different management skills and levels of attention. Separate divisions and leadership teams will help us manage Gap brand more effectively as we work to improve results, better serve our customers and return Gap to long-term quality growth."

Gap International has stores in the U.K., France, Germany, Japan and Canada, as well as store operations for Old Navy and Banana Republic in Canada. At the end of December 2001, Gap brand had 632 stores in those markets; in Canada, Old Navy had 17 stores and Banana Republic had 16 stores. The International division will have its own Gap brand merchandising team, but product design and marketing will be provided by the U.S. division.

"Our International markets represent an important part of our long-term growth strategies,". Drexler said. "Ken will bring much more focused leadership to this area of our business."

The Gap's sales exceeded $13.6 billion last year.

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