Former president of Mattel is the new CEO of Gap

Gap Inc., the American fast fashion giant that includes brands such as Gap, Old Navy, Banana Republic, and Athleta, has struggled to stay relevant in the changing fashion landscape. However, there is hope with the appointment of Richard Dickson as its new chairman and CEO. An experienced executive with a successful track record at Mattel, the maker of Barbie, Dickson's task is to bring his leadership, astronomical sales experience, and strategic expertise to revitalize Gap Inc's struggling brand portfolio and transform the company for a new era.

Who is Richard Dickson?

Prior to joining Gap Inc, Richard Dickson was president and chief operating officer at Mattel, where he led business transformation and played a significant role in increasing sales of the iconic Barbie brand. Under his leadership, Barbie's sales peaked in 15 years, demonstrating his ability to strategize and create cultural relevance for a brand. Dickson also has past experience in the apparel industry, having worked at Jones Apparel Group, making him uniquely suited to meet the challenges of Gap.

Why is Gap struggling?

Over the past year, Gap Inc. has faced several business problems. The main issue was certainly a decline in sales, down 9% to $1.1 billion, with comparable sales down 4%. Similar sales in the first quarter of 2023 were down 3%, while in-store sales were down 4% from the previous year. This slowdown also led to losses in the company's financial results: $18 million in the first quarter of 2023 alone. In the fourth quarter of 2022, comparable sales were down 5 percent year-on-year and in-store sales were down 3 percent. The company also faced a decrease in gross margin and an operating loss that also led to numerous layoffs. In addition, Gap Inc. underwent management shakeups as part of a major cost-cutting effort. The new CEO was chosen precisely as part of an optimization of the company's operating model and cost structure.

Beyond the business proper, Gap Inc. has had difficulty producing clothing that resonates with consumers. Analysts have noted a decline in market share over a long period of time and a failure to make clothing that people want, but difficulty keeping up with demand, resulting in delays in product availability. Then in the past year, Gap Inc. announced plans to close 50-55 Gap and Banana Republic stores and open 30-35 Athleta and Old Navy stores. This strategic move reflects the company's efforts to optimize its store presence and focus on the brands that have shown the most success.

What is expected from Dickson?

During his tenure at Mattel, Dickson, along with CEO Ynon Kreiz, implemented the "Mattel Playbook," emphasizing brand purpose, product innovation, cultural relevance, and operational excellence. This approach transformed Barbie from a struggling brand into a cultural phenomenon. Dickson's focus on connecting with consumers, diversified product offerings, and strategic partnerships with various influencers played a key role in the revitalization of Barbie.

The big question now is how Dickson will adapt Mattel's successful Playbook to Gap Inc.'s fashion industry and brand portfolio. Although a direct comparison with toys is not feasible, Dickson's emphasis on product innovation and meaningful partnerships could breathe new life into Gap's offerings. Revamping merchandise and addressing product issues for Gap's core brand will be essential to its revitalization. One challenge Dickson faces in the fashion industry is its seasonal nature. Unlike toys, clothing requires constant attention to detail and evolution from season to season. Maintaining a fresh, fashion-oriented collection while staying in step with customer demands will be crucial to Gap Inc.'s long-term success. As Gap Inc.'s largest shareholder, the Fisher family's influence over the company's operations has been a matter of contention in the past. Dickson will have to manage the internal dynamics and work effectively with the family to implement necessary changes. His previous experience on Gap's board of directors could be a starting point for success in this regard.