NEW YORK (AP) -- Gap's stock is falling in premarket trading Thursday following the retailer's announcement that Chairman and CEO Glenn Murphy will retire in February.
Gap Inc. said late Wednesday that Art Peck, the president of its growth, innovation and digital division, will assume the CEO position. He will also join the San Francisco company's board. Bob Fisher, whose parents founded the retail chain, will become non-executive chairman.
Murphy has served as Gap's chairman and CEO since July 2007.
Ike Boruchow of Sterne, Agee & Leach lowered its rating on Gap to "Neutral" from "Buy." The analyst said in a client note that Gap has continued to struggle, with its new merchandise at Gap stores failing to resonate with shoppers in September.
Boruchow said that Murphy's departure makes matters worse.
Janney Capital Markets' Adrienne Yih-Tennant also cut Gap's rating to "Neutral" from "Buy."
"We are excited and pleased with Art Peck as successor, but given product weakness at Gap, we believe his hand on the business is likely to be late 2015 and beyond," the analyst said.
Jefferies' Randal Konik said that Murphy was the key architect of Gap's turnaround, and with him leaving it's "even more prudent to remain on the sidelines."
"While we believe Art Peck is a strong replacement, management turnover adds another level of complexity and bumpiness to an already shaky fundamentals picture for Gap," he wrote.
The analyst maintained a "Hold" rating and $40 price target.
Shares of Gap declined $4.20, or 10 percent, to $37.780 in premarket trading about 2 ½ hours before the market open.
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