Gap CEO is out amid sales slump

Clothing retailer says Art Peck will depart after brief transition. He will also step down from the board.

Gap Inc.’s board announced that Chief Executive Art Peck is stepping down as the company continues to struggle to turn around a long sales slump.

The San Franciscobased retailer also said late Thursday that it cut its earnings outlook for the year as sales at the Gap and sister stores Banana Republic and Old Navy fell in the most recent quarter.

Peck, who joined the company in 2005 and became chief executive in 2015, will depart from the company after a brief transition. He will also step down from the board.

Effective immediately, Robert J. Fisher, the company’s current nonexecutive chairman of the board, will serve as president and CEO on an interim basis. In addition, the company’s board has appointed Bobby Martin, chairman of its compensation and management development committee, as lead independent director.

“As the board evaluates potential successors, our focus will be on strong leadership candidates with operational excellence to drive greater efficiency, speed and profitability,” Fisher said in a statement.

The news comes as the company is in the midst of splitting into two publicly traded companies, one for its Old Navy brand and another for the Gap, Banana Republic and its lesserknown brands.

Like many mall-based clothing chains, the Gap is struggling to turn itself around as shoppers go online or to discounters such as T.J. Maxx for their clothing. But the Gap, which largely defined casual dressing in the 1990s, has also long struggled with its own deeprooted problems — its offerings have failed to stand out from those of its rivals.

Peck had been promising investors that a turnaround is in the making. But instead, the chain has had to keep discounting its merchandise to get customers into its stores. Now, it’s turning to new ways to grab customers. In August, its Banana Republic division, following other clothing competitors, began launching an online subscription service.

Shares of the Gap Inc. slid 10% in after-hours trading Thursday.