February 20, 2018 / 2:36 PM / a year ago

UPDATE 2-Gap brand CEO Jeff Kirwan to leave retailer, shares fall

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By Nivedita Balu

Feb 20 (Reuters) - Gap Inc said on Tuesday that Jeff Kirwan, president and chief executive of its eponymous brand will leave the apparel retailer, pushing its shares down 4.2 percent.

The surprise move comes just over a week before Gap Inc is scheduled to announce fourth-quarter results.

The company is trying to tackle muted sales and a shift in consumer preference to online shopping by spending more to refresh underperforming lines, spruce up online offerings and bring new styles quicker to its Old Navy and Athleta stores.

Gap Inc raised its 2017 earnings and same-store sales forecasts in November, likely reflecting traction with those initiatives.

"While I am pleased with our progress in brand health and product quality, we have not achieved the operational excellence and accelerated profit growth that we know is possible at Gap brand," Gap Inc's Chief Executive Officer Art Peck said in a statement.

"As we move into the brand's next phase of development, Jeff and I agreed it was an appropriate time for a change in leadership," Peck said.

Gap, known for its mid-priced clothes for families, is the second-highest revenue generating brand for the company. Same-store sales at the brand fell in the first two quarters of 2017 and rose 1 percent in the third quarter.

Analysts expect same-store sales at the Gap brand to fall 0.17 percent in the fourth quarter, according to Thomson Reuters I/B/E/S.

Brent Hyder, head of global talent and sustainability at Gap, will oversee the brand as the retailer looks for a new president, the company said.

The company's stock has risen 38 percent in the past 12 months, well ahead of the S&P 500 consumer discretionary index that has risen 21 percent in the same period.

Reporting by Subrat Patnaik in Bengaluru; Editing by Savio D'Souza and Sayantani Ghosh

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