Gap Chairman and CEO Murphy stepping down

NEW YORK (AP) — Gap said Glenn Murphy will step down as its chairman and CEO on Feb. 1, and the retailer will promote executive Art Peck to CEO.

The San Francisco company said Wednesday Murphy is departing at the end of its current fiscal year. He has been Gap's chairman and CEO since July 2007.

Peck is in charge of the company's digital strategy and leads the company's Athleta, Intermix and Piperlime brands. He has worked for Gap since 2005.

Bob Fisher, whose parents founded the retail chain, will become non-executive chairman. Peck will also join the board of directors.

The company started a turnaround in early 2012 by stepping up its marketing and offering trendier merchandise. It is also expanding outside the U.S., and said earlier this year it wants to triple its sales in China in three years as it opens more stores there.

Gap is also trying to meld its online business with its physical stores as it sees shoppers' purchases influenced by the Web and mobile devices. A year ago the company started testing a program that lets customers reserve merchandise online and then pick it up at the store within 24 hours.

The company also reported disappointing sales for September on Wednesday. The results included weak sales for the Gap brand, and the company said those sales are hurting its profit margins.

In a press release, Murphy said the month was "more challenging than we expected."

Gap's total revenue rose 1 percent to $1.48 billion. Sales at stores open at least a year were unchanged, as the company reported lower revenue for the Gap brand and better results at its Banana Republic and Old Navy divisions.

Sales at stores open at least a year are considered an important measurement of retailer health because they leave out results from stores that have opened or closed within the last year.

Gap Inc. shares dropped 8.7 percent, or $3.65, to $38.25 in aftermarket trading.