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Gap Re-Shuffles: Can It Revive the Brand?

Stocks in this article: GPS

NEW YORK ( TheStreet) -- Gap (GPS) announced a major reshuffle in executives this week. But can altering ranks at its namesake brand resuscitate its flailing business?

On Monday, the specialty retailer announced that Marka Hansen, president of Gap brand's North American division, was stepping down. The 24-year veteran of the company will be replaced by Art Peck, who previously handled corporate strategy and oversaw the outlet division of Gap.

Peck, who joined Gap in 2005 from Boston Consulting Group, is the fourth person to fill the role of president in the past nine years.

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"We applaud the move for two reasons: With new leadership, we believe that the company is now better positioned to reinvigorate the Gap North America division. The selection of an insider, well-schooled in the way of Gap, will likely allow him to hit the ground running," Sitfel Nicolaus analyst, Richard Jaffe, wrote in a note. "Given Art Peck's experience as the vice president of strategy, he likely has had a bird's eye view of Gap North America division over the past two years, providing him an in-depth knowledge of the brand and its operations. In addition, we believe his two years of operating experience at Gap Outlet, although limited, has been successful."

One of the biggest concerns with Peck's appointment is his lack of experience as a retailer. But Jaffe says that his relative newness to the industry could bring a fresh perspective.

Gap's choice to go internal for a new president also has raised a red flag. "This signals to us that the company wants to continue moving in the same direction (don't expect a 180), but is likely to move faster in building on its achievements," Nomura Equity Research analyst, Paul Lejuez, wrote in a note.

Aside from the shift in president, Gap announced nearly two dozen position changes, including the promotion of Pam Wallack to head of a new Global Creative Center. The new creative center will be based in New York, not at its headquarters in San Francisco.

Gap stores will also have a new ad agency, Ogilvy & Mather Worldwide. In October, the company received backlash from shoppers when it quietly rolled out a new logo, designed by its previous ad agency Laird & Partners and supported by Hansen. Within days Gap abandoned the new logo, returning to its classic navy background and white lettering.

As part of the restructure, Gap plans to merge its operation of its Banana Republic and Gap chains with its outlet division.

"The consolidation of Gap and Gap Outlet divisions should provide both cost savings and perhaps generate some benefits in which best practices are shared," Jaffe wrote. "An example would be the merchandising nimbleness and rapid speed to market for new products demonstrated by Outlets could favorably influence Gap's efforts."

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