Drexler Resigns From The Gap

Millard (Mickey) Drexler, ceo of The Gap Inc. (San Francisco), has announced he will resign as soon as a successor is named.

The announcement comes after two terrible years for the company, which also owns the Banana Republic and Old Navy brands. Sales have plunged, and shares of Gap have lost more than two-thirds of their value since reaching a high of nearly $54 in February 2000. Many investors had been calling for drastic management changes. Drexler's pay package has been the subject of particular critical scrutiny.

“It was my decision,” said the 57-year-old executive. “I've been thinking about it for a long time. My passion is to grow things that are small until they are bigger. This evolved from a discussion to a decision only recently, but when I knew, I really felt I had to let the board know my thinking as soon as possible.”

“We respect Mickey's decision to retire after almost 19 years with the company,” said founder and chairman Donald Fisher. “Mickey's been a dynamic partner. His merchandising passion, creativity and entrepreneurial instincts helped build three of the world's most well-known retail apparel brands.”

Herbert Mines Associates, the executive recruiting firm, had been handling a search for a president of the Gap division. It will now conduct the search for Drexler's successor. “We are not necessarily looking for a retail executive or a merchant, but for a very experienced, very successful marketing executive who runs a first-class company,” said the search firm's ceo, Harold Reiter. He said they would be looking at different candidates from those under consideration for the job of Gap president.

Only three or four years ago, Drexler was being hailed as retail's top visionary, for his development of the Old Navy concept, reimaging of Banana Republic, masterminding the brilliant Gap TV commercials and integrating the Gap web site with the ads and stores. But when sales slipped (and Gap has posted 24 consecutive months of same-store declines), the executive was criticized for a huge expansion program that more than doubled the amount of retail square footage through the addition of stores and expansion of existing ones and is said to have left the company in financial disarray. Total sales have been down for the last two quarters, the company's credit ratings have been cut and its debt is high.

When Drexler joined Gap at the end of 1983, it was an undistinguished apparel chain with $480 million in sales. He honed the Gap's message and modern look, showing sure instincts for what would sell. When office casual came into vogue, he was there to push khakis. As the rebel movement went suburban, Gap had leather jackets. When Gap introduced Old Navy in 1993, the new chain — which positioned itself as low-cost hip — exploded, bringing $1 billion in revenue in less than four years.

“The adversity is going to make us a much stronger business,” Drexler said last night. “I really feel very good about where the brands are positioned right now.” This spring, Gap stores have moved away from high-fashion items like orchid leather pants and crocheted halter tops back to basics like denim and white shirts. The company says the strategy is to slow sales declines. He said it was too soon to know what he would do next. He plans to be with the company at least through the rest of the year. Beyond that, he said, “I love to grow businesses, and fashion is in my blood.”