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Filling Gap's Gaps

SAN FRANCISCO-Store closings and shift at the top seem likely whether or not a sale takes place.

By Marita Thomas | Updated on January 09, 2007

SAN FRANCISCO-As rumors of a potential sale swarm, several analysts suggest Paul Pressler’s days as president and CEO of Gap Inc. are numbered, whether or not there’s an offer to buy or a leveraged buyout of the locally based retail firm.

The sale rumors followed the Jan. 4 release of fourth-quarter financials, which not only took a deep dive, but also caused a nearly 18%-drop in the company’s full-year, per-share guidance. Based on its 2006 holiday sales performance, management said it now expects full-year earnings per share of between $0.83 and $0.87 versus the previous guidance of between $1.01 and $1.06.

With 10% and 9% drops in comp store sales at Old Navy and Gap North America units, respectively, expect store closures, predicts Howard Davidowitz. He is chairman of Davidowitz & Associates Inc., a New York City-based national retail consulting and investment banking firm. He tells GSR, “I’d not dismissing a sale, but I think store closures and a CEO-change are more likely.

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