The turmoil comes as traditional retailers struggle to keep pace with online competitors. Corporate boards, experts say, are less willing to wait for large-scale turnarounds. That could become even more pronounced, they said, if the economy sours.
“Boardrooms are much less patient than in the past,” said Michael Useem, director of the Center for Leadership and Change Management at the University of Pennsylvania’s Wharton School. “Directors are asking: Do we have the right CEO to weather the rough seas ahead? And increasingly, they’re finding that the answer is no.”
A record 172 CEOs left their jobs across all sectors in October, a 15 percent increase from the year-ago period, according to global outplacement firm Challenger, Gray & Christmas.
CEO turnover at publicly traded retailers rose to 23 percent in 2017, the last year for which sector-specific numbers are available, vs. 16 percent the year before, according to a study of Standard & Poor’s 500 companies by the Conference Board. By comparison, the industry’s historical average is 10.5 percent.
Analysts say Peck’s departure from the Gap wasn’t particularly surprising — sales had been slipping for years, and the company’s stock had lost nearly 60 percent of its value since he took over in February 2015. On Thursday, the company said it was revising down its forecasts for the year, after sales declines at Gap, Banana Republic and Old Navy stores.
Robert J. Fisher, the company’s nonexecutive chairman and the son of its founders, is taking over for the interim. Shares of the company’s stock fell nearly 8 percent Friday after the news.
“With the CEO gone, that creates a vacuum of permanent leadership and a number of questions,” Randal Konik, an analyst for Jefferies, wrote in a note to clients.
The Gap, founded 50 years ago in San Francisco, started as a one-store operation that sold only Levi’s jeans and vinyl records. But the company grew quickly, adding its own line of clothing and establishing itself as a go-to for jeans and T-shirts. It bought Banana Republic in 1983 and founded Old Navy in the mid-1990s.
In recent years, sales have hit a wall. Shoppers have grown bored with its inventory, and the company has relied on a never-ending cycle of discounts to get people into its stores. Earlier this year, Peck announced that the company would spin off its successful Old Navy brand into a separate company. Analysts said it now is unclear whether that split will take place, or who would permanently run the company.
Finding new executives who understand the fast-changing industry, they said, has become increasingly challenging. Although boards say they are looking to shake things up with fresh perspectives and new ideas, they often dip back into the same pool of candidates in what amounts to a game of executive musical chairs.
“CEOs of major companies don’t grow on trees,” said Paula Rosenblum, managing partner at the retail consulting firm RSR. “There is a lot of pressure to find new CEOs, but there are only so many options out there."
Under Armour, Best Buy, Overstock and Pier 1 have all filled their top posts internally. Others, though, are looking to competitors: John Donahoe, the former CEO of eBay, will soon lead Nike. Bed Bath & Beyond is replacing its longtime chief executive with Mark Tritton, Target’s former chief merchandising officer.
“It’s becoming harder than ever to find a CEO with a golden touch,” said Neil Stern, a senior partner at retail consulting firm McMillanDoolittle.
And while high turnover rates are common during economic downturns, he said recent departures are particularly striking given the relatively strong economy. The unemployment rate is low, wages are inching up and consumers are still spending. But, analysts warned, any change to that equation, such as new tariffs or pullbacks in hiring, could further challenge retailers.
“If we have this kind of CEO exodus in a robust consumer economy, what happens when things sour?” Stern asked. “This isn’t a good sign.”