Investors gave Gap Inc. (NYSE: GPS) a nod of approval on Friday, sending shares higher after the company said late Thursday that it will hire a food and drug veteran as its new Chief Executive Officer, ending a seven month search.

The San Francisco-based retailer said that Glenn Murphy will replace interim CEO Robert J. Fisher, who has served as interim CEO since Paul Pressler was ousted in January.

Gap shares rose 69 cents, or 4.08 percent, to $17.60 in morning trading on the Nasdaq Stock Market.

Murphy, 45, led Toronto-based Shoppers Drug for six years before stepping down in March, Gap said in a statement.

“I’m thrilled with this opportunity to lead Gap Inc. given the company’s iconic stature and heritage of innovation and creativity,” said Murphy. “Alongside some of the most talented people in the apparel industry, we’ll work to reestablish each brand’s leadership position and set the company along a path of sustained earnings performance.”

Chief Executive Paul Pressler left in January after the company’s poor performance during the critical holiday shopping season.

Gap has struggled to regain its footing since then. In its latest quarterly report, net income fell to $178 million, or 22 cents a share, from $242 million, or 28 cents a share, in the year-earlier period.

Murphy served for six years as chairman and CEO of Shoppers Drug Mart, the largest drug store chain in Canada. Under his leadership, he led the company through 22 consecutive quarters year-over-year and its earnings per share doubled.

Gap, which operates 3,100 stores including the Old Navy and Banana Republic chains, said Murphy will earn about $12 million for the year ending in 2008, some of it in performance-based compensation.

Murphy also stated his intention to purchase 150,000 shares of Gap Inc. common stock in the next few weeks. At Thursday's closing price of $16.91, that will cost $2.5 million.