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Gap (GPS) CEO Murphy Continues to Follow Lampert Blueprint

June 10, 2008 | About:
insider

Todd Sullivan

22 followers
Before Glenn Murphy was even hired by the Gap I said that if the new CEO was in the Edward Lampert at Sears (SHLD) or Julian Day at RadioShack (RSH) mold, shareholders would really benefit.

After he was hired I was positive on the choice based on his track record and continued to think he could produce there.

After Murphy announced his plans for the company, I could not help noticing something familiar about it.

As it has unfolded, the blueprint is becoming more obvious. Shares have responded climbing 14% from their last summer low's after Murphy's hire.

Now this:

Murphy said Tuesday the company plans to launch a real estate restructuring that will close some stores and relocate, remodel or downsize others. Murphy said the move aims to better utilize the 40 million square feet of store space Gap leases, part of his effort to bolster profits while revamping the company's namesake and Old Navy chains.

"We will look at how best to use our high quality real estate portfolio," Murphy said at the Piper Jaffray consumer conference in New York. Murphy, who took the top job at Gap last year, said the struggling clothing chain will reduce square footage per point of distribution, with most of the changes slated to start next year.

Gap shareholders are going to do just fine under Murphy. Let's not forget, with the exception of Wal-Mart (WMT), retailers are being savaged right now. The fact that Murphy's shareholders (because of the company's results) have escaped that must be telling us something, the plan is working.

About the author:

Todd Sullivan
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.3/5 (12 votes)

Comments

kfh227
Kfh227 premium member - 6 years ago
I think the whole key to kids fashion (approx 11-17 year old demographic) is a bombardment of advertising. At those ages, people listen to whatever the media throws at them. And you can not stop being aggressive with advertising when the good times are rolling.

Take this for what you will but it is the whole key. Make kids think it is "cool" or "keen" to shop at a place and you will win.
gav_sharma
Gav_sharma - 6 years ago
this is one of the most useless post gurufocus has emailed me.

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