(MONEY Magazine) – GAP INC. (GPS) CEO: Paul Pressler Tenure: Six months Price: $14.76 52-week range: $8 to $14.76 Profits: $447 million Est. '03 P/E: 20 Revenue: $14 billion Market cap: $13 billion

Note: Data as of Feb. 26. Source: Thomson/Baseline.

When Paul Pressler took over from Mickey Drexler as CEO of Gap in September, it was far from a routine changing of the guard. Gap's board of directors wanted a fundamentally different manager at the helm--a broad strategic thinker and marketing whiz rather than a fashion maven.

Drexler, once adored by Wall Street for his retail prowess, built Gap from a U.S. company with $445 million in revenue to a global player with $14 billion in sales. But by 2000, Drexler had fallen out of touch with customers; from then on Gap suffered negative same-store sales comparisons for 29 months in a row. The stock tanked and Drexler was sent packing. "Mickey was unusually brilliant as a chief merchant but less successful at managing a mature, multifaceted business," says Todd Slater, retail analyst at Lazard.

Enter Pressler. As a top exec at Disney Stores from 1990 to 1994, he turned them into mini Magic Kingdoms, providing entertainment as well as merchandise. As head of Disney Theme Parks & Resorts, he oversaw their expansion abroad and increased attendance while keeping a lid on costs. Both are feats he needs to replicate at Gap. Fans say that his experience in marketing brands simultaneously to different groups--persuading both grandparents and grandkids to visit Disney World--will translate well at Gap. "Disney's an experience--a lifestyle and a major brand," says Marshal Cohen, senior industry analyst at market information company NPD Group. "Gap is a similar lifestyle brand."

So far, so good. For its most recent fiscal quarter--the first full quarter under Pressler--Gap met its earnings target. Net profits were $249 million vs. a $34 million loss for the same period a year ago. However, Pressler has stressed the need to "earn the right to grow by improving our balance sheet, tightly managing costs and creating sustainable strategic plans for each of our brands." To win back shoppers, Pressler has launched focus groups and product testing. He's also looking at ways to upgrade sales-tracking systems and reduce the time it takes to bring new products to stores.

Is Gap a compelling turnaround story? Value investor David Dreman of the Scudder-Dreman funds holds 5 million shares--but sold 5 million late in 2002. "Gap is worth a small position, but I want more evidence of a turnaround," he says.

Other value investors, such as Oakmark's Kevin Grant, say that at $14.76 a share--down 71% from its all-time high of $52.88--Gap already looks like a good buy. The bullish case from hedge fund Maverick Capital's Brian Zied, who bought Gap this past summer: While margins have improved, streamlining efforts will boost them from 9% to historical levels in the low teens, sending earnings above $1 a share in the next fiscal year vs. the Street's estimate of 74¢ a share. If Zied is right, Gap could once again become a portfolio classic. --STEPHANIE D. SMITH