Gap Dumps CEO After Poor Holiday Season

An exterior of a Gap store is seen in a San Mateo, Calif. file photo from Jan. 4, 2007. Gap Inc. Chief Executive Officer Paul Pressler resigned Monday following a miserable holiday shopping season that hurt the retail chain's fourth quarter profit. (AP Photo/Paul Sakuma, File) (Paul Sakuma - AP)

SAN FRANCISCO -- Gap Inc. was already struggling when it brought in Paul Pressler as chief executive more than four years ago. Those troubles look even more daunting as the clothing retailer ushers Pressler out the door with a $14 million severance package that leaves him in a lot better shape than the company he departs.

Pressler's exit, announced late Monday, follows a dismal holiday shopping season that worsened the decay that has been eroding Gap's sales since the spring of 2004.

The deepening problems have dragged down a retailing icon that owns 3,100 stores under the Gap, Old Navy and Banana Republic brands.

Pressler, who became Gap's CEO in September 2002 after leaving his previous job running Disneyland, repeatedly promised to bring back shoppers during the past year, to no avail.

The recurring disappointments had already convinced many investors that Pressler should be fired. In a Monday statement, Gap said its board and Pressler "mutually agreed" it was time for him to leave.

"It was a tough environment when Pressler arrived and things are even tougher now," said retail industry analyst Jennifer Black.

San Francisco-based Gap named Robert J. Fisher, the son of founder Donald Fisher, as CEO on an interim basis. The younger Fisher has previously held several top jobs at Gap and has been the company's nonexecutive chairman since May 2004, when he stepped into his father's shoes. The elderly Fisher, Gap's largest shareholder, remains chairman emeritus and will participate in the search for a new CEO.

After Gap's latest letdown during the holidays, more investors began to bet that the company would be sold to a deep-pocketed buyout firm interested in engineering a turnaround.

The speculation intensified earlier this month amid reports that Gap had hired investment firm Goldman Sachs to explore "strategic alternatives" _ financial jargon often used when companies are about to throw out a "for sale" sign.

The shake-up could signal Gap's intention to remain independent. Given Gap's problems and an estimated $20 billion sale price, several analysts doubted the company's ability to attract a buyer.

In a statement issued Monday, Robert Fisher made it sound as if Gap will try to fix its problems on its own.

"During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our focus on ... reinvigorating our brands and charting a new course for the future that will deliver strong returns for our shareholders," he said.