NEW YORK — Security analysts had their first up-close look at Gap Inc. chief executive officer Paul Pressler Thursday, and the morning-after reviews were uniformly positive.
"We like the new fellow Pressler and are upgrading our rating from ‘sell’ to ‘hold,’" ran the headline on a research report from Robert Buchanan, analyst at A.G. Edwards & Sons. "New ceo Paul Pressler isn’t a career retailer, true, but he does strike us as an intelligent doer and an active listener."
Pressler’s ability to listen — and the likelihood that Gap will do a better job of tuning in its current, former and prospective customers — impressed the analysts, who met with him at sessions here.
Wells Fargo Securities analyst Jennifer Black noted in her report that Pressler "plans to conduct focus groups and product testing, which we believe should help the company to avoid a large-scale fashion miss as well as prevent it from losing opportunities in certain classifications or regions. Currently, the company is testing petites on its Web site and in a few of its stores."
Black reiterated a previously issued "buy" rating on Gap, with a target price of $27 a share. The stock closed Friday at $15.70 a share, down 15 cents, or 1 percent, in New York Stock Exchange trading. Its 52-week range is $8.35 to $17.14.
Black said that Pressler’s previous experience as head of Disney’s theme park business "has prepared him to capitalize on Gap’s turnaround, which is well under way. His multifaceted experience in general operations and marketing is a perfect fit and he appears to understand the importance of building a brand and how to connect with consumers."
Striking a poetic chord, she wrote: "We believe that Paul’s magical background will enable him to cultivate the resources of the proverbial beast and lead the buds of imagination to bloom."
Dana Telsey, specialty and luxury analyst at Bear Stearns, reiterated her "peer perform" rating and pointed out that "the size of the fleet" of Gap, Banana Republic and Old Navy stores is still a matter under review by Pressler "with no scheduled time line for formal discussion. He views Old Navy as being the concept that is furthest along the path of improvement."However, Black reported to her clients, "Gap reportedly has 400 to 500 leases coming up for renewal on a yearly basis versus the previously reported 100. We believe that Mr. Pressler will take an opportunistic approach to the company’s real estate position."
As reported, Gap, which has more than 3,100 store locations, some with more than one nameplate, included a surprise when it released third-quarter earnings last month — the news that it would have a net decrease in companywide square footage in the coming fiscal year.
Since the Sept. 26 announcement that he would succeed the legendary Millard "Mickey" Drexler as president and ceo of the nation’s largest apparel specialty store, Pressler has served as something of a good-luck charm for the $13.85 billion retailer. It broke a 30-month losing streak of declining comparable-store sales declines in October, when comps rose 9 percent, and followed that up with an 11 percent comp pickup in November. Supported by quirky television advertising in which core basic items are included in parodies of TV shows from the past, Old Navy led the charge in both months with comp increases of 24 and 15 percent, respectively.
However, those improvements reflect the final days of the Drexler era rather than the beginning of Pressler’s tenure. A.G. Edwards’ Buchanan believes that the new ceo will benefit from the recent weakness of Gap’s business for quite a while, and he said he expects comps to average increases of about 5 percent and gross margins to improve from their recently anemic levels.
Buchanan noted: "If Paul Pressler inherits a busted business in Gap stores, one that needs to close hundreds of stores as part of the fix-up process, he also inherits some totally easy historical comparisons."
He advised Pressler to consider the hiring of a top merchant "to provide vision and stay atop day-to-day execution in the one important area of the business in which he isn’t knowledgeable."
Pressler plans to set up a customer research department to "get inside of the head" of customers, but Buchanan noted that he’s also aiming for closer communication within the organization. "We also look for the new fellow to do a better job of getting various and sundry corporate silos that have developed, over time, to start talking with one another again," he said. "At the same time, we look for Gap Inc. to do a better job of segmenting the assortments offered by the two main operating segments of Gap stores and Old Navy."Bear Stearns’ Telsey pointed out that improved systems are a priority as Gap attempts to better capitalize on its increasing branding and marketing efforts with a better flow of goods into and out of the stores. "The merchandising systems are the first to be upgraded, with distribution, planning and financial systems enhancements on the drawing board," she said.
Black echoed this imperative: "We believe that any reduction in the company’s lead times and improvement in its agility will enable the company to avoid getting into trouble of the same magnitude as what we saw over the past several years."
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
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The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion