Gap goes shopping for a buyer

Dan Grech Jan 9, 2007

TEXT OF STORY

SCOTT JAGOW: We have $9 billion, do I hear $10 billion? GE is putting its plastics business up for sale and that’s about how much private equity’s expected to bid for it. Another well-known brand could be on the market: Gap. Dan Grech has more on this once-marquee name.


DAN GRECH: Gap apparel has lost its appeal.

Sales at the casual clothing chain have fallen every month for the past year. An 8 percent drop in sales over the holidays may have been the final straw.

The chain, which includes Old Navy and Banana Republic, has reportedly hired Goldman Sachs to explore its sale.

But analyst Howard Davidowitz says the sale of the company is less likely than replacing its CEO, Paul Pressler.

HOWARD DAVIDOWITZ: He doesn’t have a fashion background. He comes out of the Disney Stores. It was a poor choice from the first moment.

Davidowitz says that Pressler hasn’t responded to fashion trends.

DAVIDOWITZ: If someone comes in and reinvents the product line, you will suddenly have a turnaround in performance.

A sale of Gap would be one of the largest buyouts ever in the retail industry. It could fetch as much as $18 billion.

In New York, I’m Dan Grech for Marketplace.

JAGOW: Gap investors rejoiced at news of a possible sale. Shares gained seven percent yesterday.

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