The CEOs of Gap (NYSE: GPS) and Best Buy (NYSE: BBY) are at the ends of their respective ropes. If each company has poor holiday sales, as is expected, both chief executives likely will be out of jobs.
Best Buy CEO Brian Dunn has said more than once that the electronic retailer continues to lose ground to competition. When the company released its latest earnings, the numbers disappointed Wall. St. Best Buy also described the electronics market as challenging. Competitor Amazon.com (NASDAQ: AMZN) has not expressed similar pessimism. It is Best Buy’s failure to find a large online audience to compete with Amazon that will continue to be its most significant problem.
Gap also posted poor earnings for the most recent quarter. The clothing retailer said it would close 200 stores, or about 21% of its outlets. CEO Glenn Murphy cannot expect investors to be satisfied by decisions to shrink the firm. At some point soon, he will have to demonstrate that he can combine the right inventory with the right marketing to win back the market share that his firm has lost to retailers like Abercrombie & Fitch (NYSE: ANF).
Gap and Best Buy may post such poor numbers in the fourth quarter that each will decide to cut staff to improve margins for 2012. If that happens, the CEOs are likely to go as well.
Douglas A. McIntyre
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