Gap Inc named Art Peck as president of Gap North America replacing Marka Hansen, and the retailer said it would merge its outlet division with its namesake and Banana Republic brands.

On Tuesday, sources had told Reuters that Gap will name Peck -- who was in charge of the company's outlet unit, which operates stores under the Gap and Banana Republic brands -- as the new head of Gap North America.

Caris & Co, which backed its buy ra*ing on the stock, viewed the management change as a positive.

However, the brokerage cuts its price target on the stock by $3 to $27.

The departure of Gap brand president Marka Hansen did not come as a surprise, especially after December's sales disappointed, suggesting that merchandise assortments were not yet optimal, the brokerage said in a client note.

Shares of Gap were down 3 percent at $19.01 in morning trade on Wednesday on the New York Stock Exchange.

(Reporting by Mihir Dalal in Bangalore;Editing by Prem Udayabhanu)