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NEW YORK (AP) — Gap Inc. cut its full-year profit outlook Thursday after reporting a sales shortfall in the fiscal third quarter and announced management changes at its Gap and Banana Republic brands.
As part of the executive overhaul, Jeff Kirwan, 48, will become global president for the Gap brand in December following a brief transition period. Kirwan, who was head of Gap's China business, succeeds Stephen Sunnucks, who will leave the company on Dec. 19 after steering the growth of its namesake brand for nearly 50 countries for the past decade.
Meanwhile, Andi Owen, 49, who heads Gap Outlet's division, will become global president for Banana Republic effective Jan. 5. She succeeds Jack Calhoun, who will leave the company on Feb. 1 after working with Owen during the transition. Calhoun led the brand for eight years.
No executive changes were announced at its Old Navy store division.
The moves were spearheaded by Art Peck as he takes on the role of CEO of Gap Inc. in February, succeeding Glenn Murphy who has been at the helm since 2007. Peck, a 10-year-veteran at Gap, had been its digital leader overseeing new innovations that cater to mobile-savvy shoppers. The changes seem to show how serious Peck is about turning around its brands that have seen sluggish sales.
"We'll start 2015 with a management team comprised of both established executives and the next generation of brand leaders ready for the next generation of customers," said Peck in a statement. He noted that the transition period allows the teams to deliver a "successful holiday season while gearing up for a future where great product, showcased seamlessly across physical and digital experiences, consistently delights our customers."
After several years of losing its way, Gap started a turnaround in early 2012 by stepping up its marketing and offering trendier merchandise. Under Murphy's stewardship, Gap has been expanding outside the U.S., and said earlier this year it wants to triple its sales in China in three years as it opens more stores there. But in recent months, the company's business, particularly the Gap brand, has seen sales slow down as some of the hot trends like brightly colored jeans have lost their fizzle.
The changes come as retailers are wrestling with a dramatic shift among consumers to online shopping. As a result, Gap and others are trying to meld their online business with physical stores as shoppers' purchases are influenced by the Web and mobile devices.
The management moves come as Gap separately released third-quarter fiscal results.
The San Francisco-based retailer earned $351 million, or 80 cents per share, in the three-month period ended Nov. 1. That includes a tax-related benefit of 6 cents per share. That compares with $337 million, or 72 cents per share, in the year-ago period. Sales were virtually unchanged at $3.97 billion.
The results missed Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 79 cents per share and revenue of $4.01 billion.
Revenue at stores opened at least a year fell 2 percent for the quarter. By brand, Gap's key measure was down 5 percent while Banana Republic's sales were flat, and Old Navy was up 1 percent compared with the year-ago period.
The company said it now expects earnings per share for the year to be in the range of $2.73 to $2.78. Analysts had expected $2.83 per share for the year, according to FactSet. That's down from its full-year forecast issued in August of $2.95 to $3.00 per share.
In after-hours trading, Gap shares slid 3.3 percent to $38.80.
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