The Gap
GPS
MAT
Dickson said: “I have long admired Gap Inc. as a customer, a brand builder, and most recently as a board member. An even greater draw is the company’s storied brands. And I am excited for the opportunity to lead the incredible people of Gap Inc. to unlock our full potential. We are seeing encouraging signs of progress, as our teams streamline the way we work so we can focus on growth-driving initiatives – a virtuous cycle that we’ll look to become our norm. This means we have to do things differently, with a clear focus on redefining our brand’s meaning to consumers, focusing on creativity, designing for relevance as a pursuit rather than a goal, and leveraging our remarkable legacy to shape an exciting new future.”
This long comment gives readers a feeling that Dickson has respect for the organization, admiration for the history of the company, and cares for members of the teams that are working on innovative ideas for the company. Based on his past leadership style, I sense that he will pick the best ideas and make them bigger. He will promote an appropriate Gap image once he is convinced that Gap customers will want the look.
There was a time when Benneton had fabulous sweaters that went well with Levi pants. That enticed a lot of customers to shop so I would not be surprised if there were Fall sweaters that will go with Gap pants in hopes of generating the same results.
There is a need for new looks that coordinate with jeans. The jeans that Gap has always been known for do not have to all be the same color. Just as importantly, they have to have a new look. Perhaps Military? Or a Bootcut?
As far as the other name plates in the Gap portfolio are concerned, they would benefit from a refresh as well. Old Navy might come out with a brand that is unique in its design, maybe take a leaf from a Hollywood movie. Banana Republic should have apparel that is well designed but unique. Athleta should have the image of a sport figure that everybody loves.
When Dickson met with analysts after the second quarter sales and earnings were released, he stressed his admiration for the teams working on innovative, new ideas. Clearly, he wants to send a positive message and ensure personnel stability for the company. It was an effort to bring the staff together and to have them work together.
Dickson is taking over from Bob Martin, who for more than a year toiled to keep the company together as interim CEO. He did a heroic job. Now with a renewed focus to move the company forward with a fresh new positioning, we can expect a rash of exciting new ideas from the new team.
Second quarter sales and earnings
Total Company: Net sales were $3.55 billion, a drop of -8% from last year’s 2nd quarter. Comparable sales were down -6%. Net income was $137 million, and earnings per diluted shares were $0.34. Last year, the company reported $0.27 per diluted share in the second quarter.
Old Navy: Net sales were $1.96 billion, a decline of -6% compared to last year. Comparable sales were also down -6%
Gap: Net sales were $755 million. Sales were down -14%. The company noted the negative impact from the sale of Gap China, including the shutdown of Yeezy Gap and foreign exchange headwinds. Net sales would have been down -4% otherwise. Comparable store sales were down -1%.
Banana Republic: Net sales were $480 million. Sales were down -11%. Comparable store sales were down -8%.
Athleta: Net sales were $341 million, down -1% compared to last year. Comparable store sales were down -7%. In early August 2023, Chris Blakeslee replaced Mary Beth Laughton as CEO of Athleta.
POSTSCRIPT: One can expect a different company to emerge once Richard Dickson has settled in and taken over. It will be more consumer-oriented with exciting new looks and flamboyant colors. The stock reacted favorably to Dickson’s presentation and given time, one can expect a more favorable outlook.
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