Gap Inc. CEO to Exit after Weak Results
The Gap Inc. (NYSE: GPS) Board of Directors announced today that president and chief executive officer Art Peck will step down from his position and from the company’s Board. Mr. Peck will depart from the company after a brief transition. Effective immediately, Robert J. Fisher, the company’s current non-executive chairman of the Board, will also serve as president and chief executive officer on an interim basis. Additionally, the Board has appointed Bobby Martin, chair of its compensation and management development committee, as lead independent director.
“On behalf of the entire Board, I want to thank Art for his many contributions to Gap Inc., spanning a nearly 15-year career with the company,” said Mr. Fisher. “Under Art’s tenure as CEO, we have made progress investing in capabilities that bode well for the future such as expanding the omni-channel customer experience and building our digital capabilities.”
As a key member of the founding family, Mr. Fisher brings strong leadership and invaluable perspective from his 35-year history with Gap Inc., where he has served in a variety of senior executive positions, including interim president and chief executive officer. Mr. Fisher has served on the Board of Directors since 1990 and has also served as non-executive chairman since February 2015.
Mr. Martin has served on the Board since 2002 including serving as the lead independent director from 2003 to 2015. Mr. Martin is a retail industry veteran with over 35 years of experience. As the former chief executive officer of Wal-Mart International and chief information officer for Wal-Mart Stores, Inc., Mr. Martin brings extensive global governance and executive management experience.
“As the Board evaluates potential successors, our focus will be on strong leadership candidates with operational excellence to drive greater efficiency, speed and profitability,” said Fisher. “In the meantime, we will continue to focus on leveraging the power of our brands and the talented teams that lead them to improve execution and better position the portfolio for growth.”
Third Quarter and Fiscal Year 2019 Guidance
In conjunction with this announcement, the company also today reported comparable sales and provided earnings per share guidance for the third quarter ended November 2, 2019, and revised earnings per share guidance for fiscal year 2019.
Comparable sales for the third quarter of 2019 were down 4% versus flat last year. Comparable sales by global brand were as follows:
- Gap Global: negative 7% versus negative 7% last year
- Banana Republic Global: negative 3% versus positive 2% last year
- Old Navy Global: negative 4% versus positive 4% last year
Third Quarter and Fiscal Year 2019 Outlook
The company expects diluted earnings per share for the third quarter of fiscal year 2019 to be approximately $0.34 to $0.36 and adjusted diluted earnings per share to be approximately $0.50 to $0.52.
The company updated its reported diluted earnings per share guidance for fiscal year 2019 to be in the range of $1.38 to $1.47 and now expects 2019 adjusted diluted earnings per share guidance range of $1.70 to $1.75 versus previous guidance of $2.05 to $2.15.
“This was a challenging quarter, as macro impacts and slower traffic further pressured results that have been hampered by product and operating challenges across key brands,” said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc. “We have tremendous confidence in our brands and the talented organization that supports them, and we are seeing progress in some key areas. However, there is more work to do to leverage the capabilities we have invested in and deliver the profitable growth we know these brands are capable of delivering.”
Estimated adjusted earnings per share for the third quarter of fiscal 2019 excludes costs associated with the company’s planned separation, and costs related to the previously announced specialty fleet restructuring.
Estimated adjusted earnings per share for fiscal year 2019 excludes costs associated with the company’s planned separation, costs related to the previously announced specialty fleet restructuring, the gain on the sale of a building, and the impact of an adjustment to our fiscal 2017 tax liability for additional guidance issued by the U.S. Treasury Department regarding the U.S. Tax Cuts and Jobs Act of 2017. Please see the reconciliation of adjusted diluted earnings per share, a non-GAAP financial measure, from the GAAP financial measure in the tables at the end of this press release.
Third Quarter Earnings
Gap Inc. will release its third quarter earnings results via press release on November 21, 2019 at 1:15 p.m. Pacific Time. In addition, the company will host a summary of Gap Inc.’s third quarter results during a live conference call and webcast on Thursday, November 21, 2019 from approximately 2:00 p.m. to 3:00 p.m. Pacific Time. The conference call can be accessed by calling 1-855-5000-GPS or 1-855-500-0477 (participant passcode: 1359664). International callers may dial 1-323-794-2078. The webcast can be accessed at www.gapinc.com.
About Gap Inc.
Gap Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City brands. Fiscal year 2018 net sales were $16.6 billion. Gap Inc. products are available for purchase in more than 90 countries worldwide through company-operated stores, franchise stores, and e-commerce sites. For more information, please visit www.gapinc.com.