This story was first reported on and published by Glossy sibling site Modern Retail.
Gap is slotting in two new executives — including one from Mattel — as it looks to rev up business and recapture revenue.
On Wednesday, the company announced that Richard Dickson, the president and chief operating officer at Mattel, would take over as president and CEO of Gap Inc. Two days earlier, it tapped Chris Blakeslee, president of Alo Yoga, as president and CEO of its athleisure brand Athleta. Both positions have been vacant for some time; the former since last July, and the latter since March. Dickson will take over August 22, while Blakeslee will take over on August 7.
The appointments come at a crucial time for Gap, which is looking to reinvent itself after many months of lackluster sales. The company — whose portfolio includes its namesake Gap brand, Old Navy, Banana Republic and Athleta — reported a drop in year-over-year net sales for three out of its last four quarters. Gap has also struggled to get its inventory levels under control, eliminated its chief growth officer role in March and announced massive job cuts in September and April. In May, Gap said it anticipated net sales for fiscal 2023 to decrease “in the low to mid-single digit range, compared to last year’s net sales of $15.6 billion.”
Investors are hoping that Dickson could do for Gap what he did for Mattel and the “Barbie” brand. While at Mattel, Dickson — who began his career as an executive trainee at Bloomingdale’s — decided the brand should use one shade of pink (Pantone No. 219), reduce its licenses and include more dolls with different body styles and ethnicities, according to the Wall Street Journal.
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The brand is now enjoying a retail revitalization. Over the past year, major names from Pinkberry to Airbnb have raced to secure “Barbie” collaborations, and the “Barbie” movie is breaking box office records. Dickson has harnessed the brand’s other IP as well; Mattel has 45 more movies in development around popular franchises like “Polly Pocket” and “Hot Wheels.”
Each brand under the Gap umbrella is struggling with a particular set of challenges. Old Navy, which typically caters to a lower-income consumer, is losing customers to fast-fashion players like H&M and Shein. Gap posted a surprise profit this past quarter, but it’s also shrunk its footprint in malls, once a major sales channel. Banana Republic, too, has closed stores and is now leaning into household items like bed frames and blankets to grow its assortment.
Athleta is also in need of a refresh, as its growth has slowed down. While Athleta was once an industry standout, it’s now having to compete with the likes of Fabletics and Alo Yoga, both of which have gained market share, as well as the long-dominant Lululemon. This past quarter, Athleta’s net sales fell 11% to $321 million.
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“I think Athleta, for a long time, has been in a bit of a no man’s land,” Gabriella Santaniello, founder of A Line Partners, told Modern Retail. “They haven’t really been hitting it with the fashion. And Alo really did. Every woman, every young girl wants Alo, and they came out with sets and really pioneered that and pushed that onto the market. They brought a more contemporary feel to athleisure, and that’s something that would be invaluable for Athleta.”
Similarly, analysts say all of Gap must turn itself around.
Dickson, unlike some of Gap’s previous leaders, did not work for the company before. But, bringing in an outsider could be a welcome change, Santaniello said. With an insider, she explained, “you can look at it as they know the company and they’ve grown up with the company and they understand the DNA of the brand. But sometimes, you can’t see the forest for the trees.” Someone else coming in could have a “whole new, fresh set of ideas,” she added.
Mattel and Gap are in two different categories, and Gap owns its own distribution channels. At the same time, Mattel and Gap have more in common than some might think, Simeon Siegel, a managing director and senior analyst at BMO Capital Markets, told Modern Retail. “Both companies sell physical discretionary products,” he said. “Holiday matters for both. Branding matters for both. Customer perception matters for both. Storytelling matters for both. At the end of the day, the difference between a toy and a sweater may not be as far of a stretch as it might seem on the face level.”
One of Dickson’s biggest challenges will be refreshing Gap’s products, Neil Saunders, managing director at GlobalData Retail, told Modern Retail. “That is the heart of the problem,” he said. Gap has leaned heavily into discounting to clear out inventory and make itself more attractive to cost-conscious customers, but hasn’t always succeeded.
“It needs to develop and sell products that resonate better with consumers,” Saunders said. “It needs to really refresh what is a very tired brand and tired assortment that doesn’t really change much from year to year. Once that’s happened, of course, you can then start to look at how you portray the brand more effectively, how you market it more effectively, how you get it back on the radar of consumers.”
Similarly, Dave Bruno, director of retail market insights at Aptos, said he suspects Dickson will begin his post by “taking a hard look” at Gap’s assortment strategy. “Assortments bring every brand to life for consumers, and given his success extending and enhancing the Barbie line, I expect we will see significant changes to the Gap brands’ assortment strategies,” Bruno wrote in a note.
Similar to Dickson, investors are hoping that Blakeslee could help Athleta become a more attractive option for consumers. Under Blakeslee’s leadership, Alo Yoga grew to operate 40 stores and reached more than $1 billion in sales in 2022. In a press release, Bob Martin, the interim CEO of Gap, called Blakeslee “well suited to guide Athleta into long-term, sustainable growth.”
Due to the nature of the search process, it may be a coincidence that Dickson and Blakeslee’s appointments were announced so close together. At the same time, for Gap, “I think that they’re hoping that this will come across as some sort of reset and as an ambition to really change and shake up the business,” Saunders said.
“Now, whether that materializes remains to be seen,” he said. “But, I think it certainly looks good. It looks like they’re getting their house in order finally.”
