Paul Pressler's problematic tenure at the helm of Gap Inc ended Monday in a far less surprising way than it began.

Gap Inc said late Monday (22 January) that Pressler, through mutual agreement, has resigned the posts of president, chief executive officer and a director of the San Francisco, California-based specialty store giant.

Robert Fisher, non-executive chairman, will succeed him as president and CEO on an interim basis as the company searches for a successor.

Pressler was a surprise choice as CEO in September 2002, coming to the retailer from The Walt Disney Co, where he'd headed its retail and amusement park businesses, with no prior experience in apparel retailing.

However, his departure has been anticipated for months as it became clear that the deterioration in Gap's sales, particularly at the Gap and Old Navy nameplates, was in fact worsening rather than getting better.

Gap sounded intent on a better CEO match as it seeks Pressler's successor. The company said the search will focus on "recruiting a chief executive officer who has deep retailing and merchandising experience in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline."

Gap's search committee will be led by director Adrian Bellamy, chairman of The Body Shop International Plc, and will also include Donald Fisher, founder and chairman emeritus of Gap; Domenico De Sole, former president and CEO of Gucci Group NV; and Bob Martin, lead independent director and former president and CEO of Wal-Mart International.

Robert Fisher commented: "During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our focus on what has been at the heart of the company's past success, reinvigorating our brands and charting a new course for the future that will deliver strong returns for our shareholders."

Fisher is the son of Donald Fisher and a long-time Gap executive who has led Banana Republic and Gap brand and, since 1990, served as a director.

Since May 2004, Gap's corporate same-store sales have risen only in two months. After they fell 8% in December, Gap reduced its fourth-quarter earnings projections for the second time in as many months and they are now expected to be US$200m lower than first forecast. That's on top of an 11% drop in third-quarter profits.

While Gap remains the largest US-based apparel specialty chain, it has been shedding market share with stirring rapidity. Corporate revenues peaked at $16.27bn in 2004 and fell to $16bn last year. Through the first three quarters of 2006, they were off 1.7%, to $11bn.

Goldman, Sachs & Co, which earlier had been retained to help the troubled retailer explore strategic alternatives, last month released a study that estimated dollars lost by major retailers based on decreases in market share.

For Gap, those figures were fixed at $457m in 2004 and $1.08bn in 2005. The estimate for fiscal 2006 is $1bn; for 2007 and 2008, the numbers are placed at $372m and $1.36bn, respectively. 

Pressler's employment contract, signed in 2002, calls for him to receive severance of "up to approximately $14m," assuming a stock price of $20 per share. The majority of this amount, about $9.5m, would be in stock option acceleration. 

However, he also is entitled to salary of up to $1.5m a year and bonuses up to a total of $1.5m over a two-year period, subject to reduction or elimination if he accepts employment elsewhere. 

Gap shares closed at $19.90, down 10 cents, in New York Stock Exchange trading Monday just prior to the announcement of Pressler's exit.

Gap is scheduled to release its fourth-quarter and full-year financial results on 1 March.
By Arnold J Karr.