Gap CEO departure the latest spot of bad news for embattled retailer

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Gap Inc. shares fell more than 10% in the extended session Thursday after the retailer said President and Chief Executive Officer Art Peck will be stepping down and cut it outlook for the third quarter and for the year.

Peck will “depart from the company after a brief transition,” Gap GPS, +1.86%   said, without providing further details. Robert J. Fisher, nonexecutive chairman of the board, will also serve as interim president and chief executive officer, the company said. Peck also will step down from the company’s board.

The board also has appointed Bobby Martin, chair of its compensation and management development committee, as lead independent director.

“On behalf of the entire board, I want to thank Art for his many contributions to Gap Inc., spanning a nearly 15-year career with the company,” Fisher said in a statement.

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In the same news release, Gap reported falling same-store sales and cut its guidance for the third quarter and for full-year 2019, calling the three months ended in September “challenging.” The company is expected to report third-quarter results after the bell on Nov. 21.

Same-store sales were down 4% in the third quarter, Gap said. They were flat in the year-ago period.

Comparable sales at Gap brand stores led the downturn, off 7%, the same as last year. At Banana Republic, same-store sales fell 3%, versus a 2% increase last year. At Old Navy, Gap’s lower-priced and most successful brand, same-store sales fell 4%, versus a rise of 4% last year, the company said.

Gap said in March it was spinning off Old Navy.

Gap said it expects third-quarter per-share earnings between 50 cents and 52 cents. It called for adjusted EPS between 34 cents and 36 cents in the quarter. Analysts polled by FactSet expect the retailer to report adjusted earnings of 55 cents for the quarter.

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For fiscal 2019, the company said it expects EPS between $1.38 and $1.47, and an adjusted EPS between $1.70 and $1.75, compared with a previous guidance between $2.05 a share and $2.15 a share.

“This was a challenging quarter, as macro impacts and slower traffic further pressured results that have been hampered by product and operating challenges across key brands,” Chief Financial Officer Teri List-Stoll said in the statement.

Gap shares had ended the regular trading day up 1.9%. For the year, the stock is down 30%, versus gains of 23% and 19% for the S&P 500 index SPX, +0.27%  and the Dow Jones Industrial Average. DJIA, +0.66%