Updated from 4:52 p.m. EST

Paul Pressler has fallen out of the Gap ( GPS).

The San Francisco-based retailing giant, struggling amid a two-year-long sales slide, said Monday that its board and Pressler "mutually agreed" that he will step down as president and CEO. He also will resign his seat on the company's board.

Robert Fisher, a 30-year Gap veteran and the company's current nonexecutive chairman, will serve as president and CEO on an interim basis. The company formed a board search committee to find a new CEO.

The move ends a more than four-year reign by Pressler that has largely been marked with disappointments. While Pressler halted a sales slide when he first arrived, Gap has been in the midst of a seemingly interminable slump and has long promised a turnaround that has yet to come to fruition.

"It had to happen," says Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment banking firm. "He had lost all credibility with every constituency he dealt with -- the employees, the shareholders, the board, Wall Street, the suppliers. There was nowhere to go."

Earlier this month, Gap said same-store sales for the key December period tumbled a steeper-than-expected 8%, and the company slashed its full-year earnings forecast.

For all of 2006, Gap's same-store sales, or sales at stores open at least a year, dropped 7%. That was on top of a 5% decline in 2005.

At the time, Gap said it was "committed to making the necessary changes to improve performance." Earlier this month, two executives from its most troubled brands -- Gap and Old Navy -- left the company, and speculation about Pressler's departure had been on the rise .

In looking for a new CEO, Gap said the search committee will "focus their efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel."

That would be a departure from Pressler, who came to Gap from Walt Disney ( DIS) in 2002 without a background in fashion retailing.

"Paul Pressler came to the Gap with no background in product, and the whole business is product," Davidowitz says. "How do you translate his background into the Gap? The answer is you couldn't."

Davidowitz suggested that the Gap bring back former CEO and famed merchandiser Mickey Drexler, who is credited with building the company into an American icon. Drexler, who left the Gap in 2002 after 19 years, is now chairman and CEO of J. Crew ( JCG).

"Nothing is going to fix the Gap except talent," he says. "What they need is a genius in product. That's what made them great in the past. You're hiring a guy with a batting average. The fashion guy with the best batting average I know is Drexler."

Pressler, meanwhile, won't leave the company empty-handed. Gap said he is eligible for up to $14 million in salary, bonuses and stock options.

Shares of the Gap gained 45 cents, or 2.3%, to $20.35 in after-hours trading.

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