Millard Drexler's abrupt departure from Gap Inc after almost two decades at the helm may have come down to one number: US$11.6 billion.
That's about how much the value of the founding family's stake plummeted as Drexler struggled to pull the largest US clothing retailer out of a two-year slump. The stock dropped almost 75 percent in that time.
Gap founders Donald Fisher and his wife Doris, their son Robert and Donald's brother John own about 282 million shares, roughly a third of the company. As their investment eroded, pressure mounted on Drexler to produce a turnaround. Replacing him with someone who might take decisive steps such as closing stores became the top priority, investors said.
"I suspect that behind the scenes Mickey Drexler kept telling the board `I can do it. I can change things,'" said Marty Bukoll of Northern Trust Corp, which manages more than US$330 billion including Gap shares. "They finally wearied of it."
Drexler, also known as Mickey, was trying to revive sales with a return to basic clothing such as denim jeans and white shirts. Earlier, he cut jobs, pared expansion and sold US$1.2 billion in convertible notes to raise funds.
It was going to take at least until the end of summer for the stores to replace bright colors and trendy designs with the merchandise Drexler was betting on, investors said. And there was no guarantee of success, they said. Meanwhile, borrowing costs rose after Gap's credit ratings were reduced to junk and a recovery became less certain, analysts said.
Shares of the owner of Gap, Banana Republic and Old Navy stores lost three-fourths of their value as they fell from a record US$53.75 in February 2000. They rose US$0.17 to US$14.48 in early afternoon trading.
Drexler, 57, said last week he will retire as chief executive officer when a successor is found.
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