The Paul Pressler reign at Gap (NYSE:GPS) is over. The troubled CEO is stepping down, and even though the struggling retailer claims that the resignation is "mutual", you just know that this is not how Pressler wanted to go out.

He came to the company four years ago, having helped grow the Disney Store concept for Disney (NYSE:DIS), not to mention having watched over its theme parks. Unfortunately, Gap's problems weren't as easy as slapping an embroidered Winnie the Pooh on a pair of denim slacks and marking them up accordingly.

The irony is that despite Pressler's lack of deep retail experience, he was walking into an ideal situation. Comps had fallen sharply in the three previous years, sandbagging the lay-up of store-level improvement he was able to achieve in 2003.

Pavement over penthouse
Contrary to popular belief, this is the dream job scenario for an incoming CEO. You don't want to be like the now-deposed Bob Nardelli, who leaves General Electric (NYSE:GE) and latches on to the chieftain gig at Home Depot (NYSE:HD) just as its pricey shares are peaking. The corporate world isn't all that different from professional sports coaching, where expectations often run too high when you take over a winning team. Pressler had the luxury of going to a losing squad, where his initial progress was applauded.

Unfortunately, the turnaround was an illusion. A 7% gain in comps after they had deteriorated by 22% over the three previous years was a premature victory in Pressler's freshman year at the helm. Comps resumed their slide in 2004, with sales and earnings growth deteriorating as well.

Comps

2000

(6%)

2001

(16%)

2002

(3%)

2003

+7%

2004

0%

2005

(5%)

2006

(7%)*
*Through the end of December (Gap's fiscal year ends in January)

I saw this coming. Last month, I singled out Pressler as one of four CEOs that were likely to be booted this year. If you thought Pressler had it easy, just imagine the grin on the face of the new leader that gets to take over a company that has seen its comps slide a jaw-dropping 28% since 1999.

The search without an end
Who will Gap's next CEO be? You aren't likely to care. As the founder's son takes control, for now, the search for a worthy replacement may be pre-empted by a buyout. That is the speculation that sent shares higher earlier this month. As soon as CNBC reported that the company was exploring "strategic alternatives," it was clear that punching out was a real possibility.

All hope isn't lost for the parent company behind Gap, Old Navy, and Banana Republic. The problem for shareholders is that the brave knight in khaki armor is likely to be a private equity firm. Gap's recovery will likely take place behind the scenes, with no ticker-tape trail.

Of course, Gap will have to recover first. The company's concepts are struggling for an identity, especially now that Target's (NYSE:TGT) "cheap chic" approach has made Old Navy redundant and Gap's namesake stores slow-plodding dinosaurs.

If one more bottle should happen to fall
Along with Pressler's departure, Gap is sticking to its watered-down guidance of $0.83-$0.87 a share in earnings this fiscal year. This is a far cry from the $1.24 per share that the mallrat had earned a year ago.

Despite the crumbling stacks of fundamentals, Gap's stock has actually risen 17% higher over the past year. Is this going to be another heartbreak in the making? What if private equity firms show the same kind of enthusiasm here as Gap's own shoppers and investors?

Thankfully, private money is more forgiving. It can see the potential in reviving the concepts and squeezing out more than just 7% in operating margin. It can also work on that patiently, without having to chime in every three months with performance updates.

Gap? I think your days as a public company are numbered. Pressler? Enjoy your meaty severance, and good luck collecting pixie dust wherever you wind up next.

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Longtime Fool contributor Rick Munarriz didn't step into a Gap or Banana Republic in 2006, though he did get dragged into an Old Navy once. He does own shares in Disney. Rick is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.