Forget His JCPenney Work - The Gap Hired Michael Francis For His Time At Target

on September 14 2012 6:13 AM
The gap
File photo of the Gap logo outside a Hong Kong's first Gap Store before its opening in the financial Central district. The Gap Inc. reported a 10 percent rise in same-store July sales, rocketing past analysts' estimates of 3.8 percent. Most major retailers beat their forecasts, a sign that the second-most important shopping season -- back to school -- is well under way. 2012-08-02 10:06AM Reuters

To help figure out why San Francisco-based retailer The Gap Inc. (NYSE:GPS) hired Michael Francis, it's better to ignore his brief time as president of Plano, Texas-based J.C. Penney Company, Inc. (NYSE:JCP) and look to his prior experience at Minneapolis-based Target Corporation (NYSE:TGT).

Francis, who is 49, will begin his new job as a marketing consultant for The Gap on Monday, three months after his surprise departure from the beleaguered 110-year-old Penney. His resignation as president from the "dream team" of executives led by CEO Ron Johnson, formerly senior vice president of retail operations for Apple Inc. (Nasdaq:AAPL), has been widely attributed to the public's lackluster response to an overhauled, simplified pricing system in the first half of the year. The initiative turned away confused customers and has since been scrapped.

While his brief stint at Penney's won't be the highlight of Francis's career as a marketing executive, it doesn't appear to be hurting him, either. The reason: Target's performance in the years Francis served as the head of marketing. From January 2001 until the start of 2011, Francis was a key driver of the company's marketing strategy. Under his direction as chief marketing officer, Target became the world's largest seller of gift cards. A year later, Francis co-invented a patented store value card on behalf of Target Brands Inc. In all, Francis spent 21 years as a Target executive, and The Gap's CEO and Board Chairman Glenn Murphy may be hoping to bring some of Target's successes in recent years to his company.  

"People like his Target background because they think Target has the 'secret sauce,'" said Paul Swinand, an equity analyst at Morningstar who specializes in department stores and luxury retailers. "Target has been significantly ahead of the curve and has been able to connect with both low-end consumers and high-end consumers, making this unique brand of 'cheap chic,' and the hope is he can do the same thing with The Gap, which has been doing great in the past few months but has been struggling since the last recession."

From January 2011 until his resignation from Target to join Penney's in September, Francis was also instrumental in steering Target's expansion into the Canadian market, the kind of international experience The Gap might need as it continues its own global ambitions. (On Friday, the company announced the opening of its first store in Mexico.)

Penney's Johnson himself said in an interview with Women's Wear Daily shortly after Francis' departure that the reason for he left after only eight months had less to do with his performance and than with having "two hands on the same steering wheel," implying conflicting directions between the two executives.

"Francis obviously had some say on the marketing strategies at Penney's, but that whole pricing thing and some of the overarching strategies were the CEO's (Johnson's)," said Swinand.

Since Francis' departure, Johnson has given no indication he will find a replacement. In remarks to investors last month Johnson cited a series of initiatives that are clearly his. These include using Penney's stores to hold yoga classes and placing lounge chairs in centrally located communal spaces called "The Square" in redesigned showrooms.

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