This business journalism racket can be pretty easy when seen in a certain light -- either day or moon. All you have to do is give something with which you're not emotionally involved a flat gaze and say what is wrong or right about it as it currently stands. Journalism, after all, is about what is. The essential problem is that business, especially stock prices, is about what will be. And God help many (uh, any) of us who actually attempt to offer proactive solutions to what might make a once-great but now-ailing company great again. Sure, we can tell you what went wrong. But what has to go right? That's why I am going to give my coveted Business Press Maven "Nod of Approval" to a lame little effort from The Economist. I know, I know: This truncated story and a twig or two will barely kindle a fire. But the point, I say with my tendency to condescend in full flower, is the effort. Even in failing to fully explain how to resuscitate Gap ( GPS), this article is more instructive to the investor than so many others. At least it gives you a road map of sorts: If you see a surge of new advertising hitting the airwaves, a la 2002, does that necessarily mean the Gap's problems are solved? Remember that creating an iconic ad campaign to sell widgets, or khakis, is a little like writing the Great American novel to sell books: easier said than done. Or, if you see the company hire a new captain, even one with an impressive CV, will that be enough to right the ship?
In the end, by reading this story that tries admirably, and fails miserably, to explain what this once-bellwether retailer should do, you also realize how hard and dependent on chance any recovery may be. And that, in a sort of roundabout way, is a huge service to investors. The article starts with the obvious backstory: Gap's history of retail mastery, followed by its massacre over the past two and a half years. During that time, same-store sales mostly have been flat, or in the immortal words of Aerosmith, "going down." Executives have been fleeing en masse because of the appearance, in the immortal words of former New York Knick Michael Ray Richardson, that "the ship be sinkin.'" And current management, which is a kind word for what is in place, has, in the immortal words of just about every other troubled management team in the world, cried "help" to a team of investment bankers it hired to explore possible escape hatches. Did I say that? I meant "options." Taking all this in but looking forward, The Economist offers up the advice of analysts: Get a new, better CEO with a background in fashion. But everyone knows that there have been plenty of much-ballyhooed executive hires who go on to lose value for all parties concerned (except for themselves, via fat agreed-upon-in-advance severance packages). And it remains to be seen whether the Gap, in its faded condition, can even lure a heavy-hitter with the goods to turn it around.
What¿s more, the article's suggested tasks for a new executive aren¿t exactly easy, or guaranteed to turn the retailer around. They include closing more stores, reducing new-product lead time and bringing in new talent. (Remember: It¿s not just new blood, but the right blood.) One possibility might be rehiring Mickey Drexler, who built Gap up, got fired about five years ago, and has now done well with J. Crew ( JCG) (which I own in my children's woefully underfunded college savings accounts.) That might be a good move. Drexler is to my mind as close to a genius as exists in retailing, if not business. Of course, if he leaves J. Crew, my kids are worse off than they were. The Economist also rounds up all the boilerplate sales and buyout options the investment bankers get paid so much to trot out time after time. So-and-so can sell; so-and-so can buy. In other words, by trying to look forward and offer true-blue fixes for what is wrong with a company, The Economist has shown investors the ironclad truth: It is going to be really difficult for Gap. Good work, sort of. As you go forward, look for more articles that attempt such a feat without a net. You'll get more out of it than you will from, say, a profile that draws a CEO as the lost love child of Einstein and General Patton.