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AGood Fit?

BY Murray Forseter

What were they thinking?

That was my first reaction upon hearing that Gap Inc. had appointed Glenn Murphy as its new chairman and chief executive. Don’t get me wrong—the 45-year-old Canadian is an experienced retail veteran. He is credited with turning around Shoppers Drug Mart, transforming it into an $8 billion drug store powerhouse (prior to that, he held senior management roles at supermarket operator Loblaw Cos. Ltd).

But Murphy’s expertise lies mainly in food, health and beauty, not apparel. Hiring a non-fashion retailer to head up the nation’s largest apparel chain at such a critical juncture in its history just doesn’t make much sense to me. A whole bevy of players, from imports such as H&M to homegrown stars as disparate as Abercrombie & Fitch, J. Crew, Forever 21 and Target, have had the net impact of making the once-vital Gap core brand largely irrelevant. It doesn’t have much time to get its mojo back.

This is not to take anything away from the achievements of Murphy, who is by nearly all counts a dynamic, highly energetic and financially disciplined leader. At Shoppers Drug Mart, which he led from 2001 to March 2007, he oversaw a company that achieved revenue growth for 22 consecutive quarters while its earnings per share doubled. He developed a strong private-label program and grew the chain, introducing new store designs and improving the customer experience.

But at Gap he faces a challenge so daunting and high-profile that, according to industry scuttlebutt, few fashion merchants (or at least those at the top of their game) were even tempted to take it on. Gap’s search for a CEO, in all likelihood, was also impacted by an industrywide problem: a paucity of top merchant talent. But that’s a topic for another column.

Gap has defended Murphy’s non-apparel background by calling him “a decisive leader with great retail instincts” and saying that its bench is now well-stocked with strong merchants and designers, and that Murphy’s chief role will be to lead and invigorate the company as a whole. All that may be true. (In fact, some strong company veterans have been put into key positions.)

But the latter part sounds a bit too close to the job Paul Pressler was hired to do back in 2002. At first, he succeeded, cutting costs, reducing debt and improving the chain’s infrastructure. Pressler’s lack of fashion smarts eventually caught up with him, however, as the chain careened from one fashion misstep to the next. I worry the same fate will befall Murphy. So do many analysts.

“I hardly think that the fashion world of retail that he is in now lends itself to on-the-job training,” wrote Robert Buchanan, analyst at A.G. Edwards, in a research note following Murphy’s appointment.

Gap needs more than rejuvenation. It needs to define its reason for being in business and who its target customers are. Most important, at the end of the day, it needs a strong decisive leader who can make the right calls on product and fashion talent and spot a trend coming on. Gap hasn’t had anyone at the top who could make those calls in a long time. The jury has just gone out on whether it picked someone who can.

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Judge revokes LeNature, Giant Eagle deal

BY CSA STAFF

PITTSBURGH The LeNature bottling facility in Latrobe, Pa. will go to Cadbury Schweppes Bottling Group Inc. instead of Giant Eagle Inc., following a federal bankruptcy court decision that Giant Eagle acted in poor faith throughout the bidding process for the plant.

Bankruptcy court judge M. Bruce McCullough ruled that Giant Eagle behaved in bad taste during the process, by threatening not to carry 15 Cadbury Schweppes soft drinks, teas, and bottled waters at its stores.

Although the judge awarded the plant to Cadbury Schweppes for $19 million, the company said that it no longer wanted the plant, and according to reports, Giant Eagle plans to appeal the decision.

LeNature was forced into Chapter 7 bankruptcy (later Chapter 11) last November after a former ceo was found to have inflated sales figures for 2005.

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BJ’s veteran promoted to chief marketer

BY CSA STAFF

NATTICK, Mass. BJ’s Wholesale Club has promoted Edward Gillooly to the new position of evp, chief marketing officer. Gillooly was most recently serving as senior vp, director of marketing.

Gillooly joined BJ’s in 1991 as assistant vp, marketing director. In 1992, he became vp of the marketing department. In September 2002, he retired from the company. In January 2007, he came back to BJ’s to head its marketing department.

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