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GAP CEO quits amid falling sales

GAP has estimated a 4 per cent drop in Q3 same-store sales, with declines across all its key brands including Old Navy. The drop comes as the GAP brand also has heavily discounted in a competitive retail environment. Art Peck, said to be the highest-paid CEO in retail business, has excelled over several years of sales declines at the GAP brand. GAP’s stock lost more than half its value during Peck’s tenure and is trading at around $18 a share. Peck’s compensation for 2018 was $20.7 million, filings show. As the flagship brand struggled and closed stores, Old Navy, GAP’s budget line created in 1994, continued to grow, topping $7 billion in sales last year.

Earlier this year, GAP said it will separate its better-performing Old Navy brand and shutter about 230 stores of its namesake apparel business, a process likely to be completed by 2020. Last year, GAP announced plans to spinoff Old Navy into a separate public company. GAP, which also owns Banana Republic, Athleta, Intermix, Hill City and Janie and Jack, and will hold onto those brands. It expects to complete the split in 2020.

Peck was expected to stay on with GAP through the spinoff, and Wall Street responded poorly to the announcement. GAP’s stock plunged during after-hours trading. The company also warned investors of weak sales during the third quarter and unexpectedly trimmed its guidance for the remainder of the year.