New York City -- Gap announced a series of changes to help revive its struggling namesake division, which hasn't posted a gain on an annual basis since 2004. The company has tapped the head of its outlet division, Art Peck, to replace Marka Hansen as leader of the Gap brand for North America, effective immediately. Peck is credited with growing the company’s highly-profitable Outlet business for the past three years. He also has been a primary architect of the company’s franchise business and international growth platform.
Other changes include creating a new design hub, called the Global Creative Center, for the Gap brand that will be based in New York, not San Francisco, the corporate parent’s home base. Pam Wallack, currently the president of Gap Adult North America, will become the head of the new design unit.
In addition, Gap stores globally are getting a new advertising agency, the New York-based firm of Ogilvy & Mather Worldwide. Seth Farbman, currently worldwide managing director at the agency, will become global chief marketing officer for the Gap brand,
"New York will now serve as the global epicenter for creativity for the Gap brand, which is exactly what we need to compete effectively here at home and internationally," Glenn Murphy, chairman and CEO of Gap, said in a statement. “With this move, Gap's marketing team will join the company's product design team in New York.”
In other changes, Gap said “I expect more from our Gap business in North America,". "The changes we're making are intended to propel the brand to deliver the product and brand experience our customers demand worldwide."
Some analysts believe that the changes announced by Gap do no address the basis of Gap brand’s problem, which is the product itself.
"The revolving door of talent and various strategies to revive the brand over the years underscores how difficult it is to execute a turnaround of this magnitude," Amy Noblin, a retail analyst at Weeden & Co. wrote in a report published Wednesday, according to the Associated Press. "Mr. Peck is well-respected internally for his leadership skills and proven business results, but we do not think going with an internal hire is necessarily the direction the Street was looking for. ... We continue to think the underlying issue for Gap brand is the product."
The company also plans to merge the operation of its Banana Republic and Gap chains with the outlet division, which includes Banana Republic Factory and Gap Outlet stores.