He Revived Barbie. Now He’s Turning Around Gap
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In the 1990s, The Gap was cool. So cool that supermodels wore shirts and jeans by the retailer on the cover of Vogue magazine. Actress Sharon Stone wore a Gap mock turtleneck to the Academy Awards. And then there were those popular commercials with all the dancers bopping around in khakis and t-shirts. But for the last two decades, things were not looking too good for The Gap Inc., the parent company, which includes Gap and sister companies Old Navy, Banana Republic, and Athleta.

Its sales slumped as it faced stiff competition from rival mall chains like American Eagle and fast fashion brands like H&M and Zara. To illustrate just how stagnant the company has been, consider this. Gap stock has been essentially flat over the last 20 years, while the S&P 500 is roughly quadrupled. But recently, things have begun to turn around. Over the last two years, as of March, gap stock is up over 130%.

And the person behind that turnaround is CEO Richard Dixon. Dixon joined the company in 2023 after working at Mattel, where he helped revitalize another beloved American brand, Barbie. And he was at the helm during Barbie's big Hollywood debut, having served as executive producer on the Barbie movie.

Now, Dixon is trying to find the same success at Gap. But with the economy facing new headwinds and consumer confidence taking a nosedive, can Dixon pull off the comeback? Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. Coming up on the show, a conversation with Gap CEO Richard Dixon on how he's bringing the roughly 55-year-old company back to life and the challenges that still lie ahead. ♪

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Richard, thanks so much for joining us. Thank you, Ryan, for having me. So my first question is, how much of your current wardrobe is Gap? Gap.

- Well, I say it is head to toe on a daily basis. It's not just Gap. We have Old Navy, Banana Republic,

I even throw in a little athletic there every once in a while, but, um, but ultimately, you know, brand fan head to toe all day long. I can't believe how many denim shirts and jeans I have now. Did you own any denim shirts before you became the CEO of gaps? I, I, I did, but I never really understood the complexity of how many versions of a denim shirt there really are. Uh, and,

Now I really, I can tell you anything you want to know about a denim shirt. Fit, feature, function, philosophy, wash, color, heavy, light. All right, so we could talk about denim all day, but I want to talk about your job and the challenges that you've been facing and the work that you've been doing as a CEO of Gap. So I want to start just when you took over the brand. When you became CEO of Gap Inc.,

in August of 2023, what did you see as the biggest challenge the company was facing? It wasn't just one challenge the company was facing. I think, first off, it's important to recognize this is a storied legacy portfolio of brands. What I would say from a challenging perspective was recognizing these are legacy brands that ultimately lost their relevance. Why did that happen? Why did they lose their relevance?

Well, the reason why is a multitude of reasons. But most importantly, what I would say is that the company was always strategically well-intended.

It had great new extensions, great endeavors, accelerated growth intent, but flawed execution. And along the way, this was a portfolio of storytelling brands. I mean, Gap, Banana Republic, Old Navy, Athleta, these are very purpose-driven storytelling brands. And somewhere along the way, we lost the brand narrative and became a retailer that sold stuff.

And that was most evident when you went into our stores or online. It was about the product and the price and not really about the narrative behind the brands or what made that merchandising story appealing. And that's really a lot of, I believe, where the company went more wrong than right. That being said, it has always maintained a great deal of volume.

But ultimately, the relevance, if you will, to really start to grow the brands into continuous improvement models was lacking. So how did you set about trying to make Gap more culturally relevant? How do you do that for a brand that used to be cool but isn't that cool anymore? Well, you know, it isn't just one thing. But what I always start with is what made the brand great to begin with?

How did it start? What was its breakthrough? How did it scale? What was happening in the world that became so interesting and relevant for the brand to hit those highs? And then where did it go wrong? And so in order to recognize how to fix something, you have to acknowledge what's wrong.

And to do that, you had to go back to the origin story. And that's what I do as a playbook. You go back and you sort of look at what made you great to begin with. What is the purpose of a brand? What is your reason for bringing? Does anybody need another denim shirt? Does anybody need another white t-shirt? What's going to make ours unique and different? And so understanding that, and then can help you guide the context of how to create relevance.

So the future and gap as a brand started in 1969 in a progressive city in San Francisco, selling denim records and tapes everywhere.

It was about denim and music. It was an all-inclusive brand, all sizes, all races, all sexes. And in the context of that conversation back then, that was a really innovative approach in the context of retail and consumer. And so recognizing that origin story and figuring out how to make that relevant today is what's inspiring us.

So at your last job as the chief operating officer of Mattel, you got a lot of credit for reinvigorating the Barbie brand. Can you draw some comparisons? Were there comparisons that you can draw between what you did at Barbie and Mattel for what you're now doing at Gap?

I would say that the methodology is virtually the same, uh, running a disciplined business, financial and operational rigor, and ultimately reinvigorating brands. And Barbie was no exception. Um, I, I had a great experience with a fantastic team there working on the revitalization of an iconic brand, similar attributes to gap, iconic American brand, going back to the start of that brand, the founder of Barbie Ruth Handler, uh,

invented Barbie inspired by her daughter playing with paper dolls and imagining a world of possibilities beyond what careers were offered at that particular time to women and girls. And so through that process, again, peaks and pits, Barbie had transformed into an iconic, inspiring figure for little girls, but somewhere along the line, lost that narrative, lost that relevance.

And with a team of people and lots of work, we work to revitalize that brand, change the narrative and create a culturally relevant brand.

storytelling methodology around the same figure that inspires girls' limitless potential. And that was the original premise of the brand. Fast forward through different executions that ultimately revitalized that brand. So arguably the capstone to Barbie's turnaround was the Barbie movie that came out last year, which you were the executive producer on. Now at Gap, do we expect to see a Gap movie? Yeah.

A pair of khakis that comes to life, perhaps. Perhaps. Or who lives in those khakis? How well lived a person's life is if you sort of walk their life through their khakis. It sounds like you've got the script ready to go. Don't quote me on that one. Don't quote me on that one. But that was instinctual. Look, I think a brand like Gap is a pop culture brand. It is a canvas for conversation.

One of the most beautiful things about our story as a Gap brand is we're not defining your style. We provide you the style and the apparel for you to define your own style.

This is a brand that's all about originality. It's a brand through its history that was inspired by artists and musicians, inventors. If you look back at our history of our ad campaigns, it was always rooted in music and entertainment. We've talked about our methodology, if you will, being fashion-tainment. The combination of fashion and entertainment is where Gap sits. And so you can imagine a lot of interesting ways to

That Gap as a concept, as a brand, as a platform could express itself in music, in art, in fashion, and in culture. And I would watch the space as we continue to evolve into, you know, again, an iconic American brand that really shapes culture. So do you think that Gap needs to have its own, you know, streaming, music streaming service now to get back to the music roots? Yeah.

Look, I think it's possible. You know, I think when you look at the roots of the brand and where we've taken the brand over the last couple of years and where the brand has always been, it's been at the epicenter of pop culture.

Music, dating back to Madonna, Missy Elliott, Lenny Kravitz. Today, we work with great musicians. And over the last year and a half, we've experienced, if you will, what we'll call a renaissance, if you will, getting back to some of the things that made Gap great, but interpreting that for today's consumer, today's artists, today's fashions. I wanted to talk with you about

your decision to bring in the fashion designer, Zach Posen, who a lot of people talk about, uh, having a big influence on the brand. Um, he's, uh, gaps, creative director. He's been described as a boy wonder in the fashion world. He's well known for his, um, for his role as a judge on the reality show project runway. Why did you want to hire him? So Zach, um, is a cultural curator. Uh, he was brought in to create first the statement, uh,

that this is an organization that is going to evolve into a design-led, more creatively driven organization. Fashion, pop culture is identified by creating wants, and that is a creative process. It's a business about art and science. And Zach is well known, certainly for his design capabilities, but he's also really familiar in the content space.

And the entertainment space, of course, Project Runway and various other ways that he's expressed his creativity, leveraging his fashion skill sets. He's brought incredible energy to the portfolio. And I believe a great addition as a creative leader in an organization that is going to unlock more and more creativity. He's a magnet for talent.

which has been fun bringing in new creative talent into the organization and where he started to have influence, whether it's on Gap with the recent launch of Gap Studio, the PR and the special dresses that we've done on the runway. Old Navy just launched an occasion segment in dresses that's starting to perform really well. Or the technical side.

skill sets that he has on fit across our brands and how important fit is to the consumer proposition. So all in all, you know, again, I couldn't be more thrilled to have somebody like Zach Posen in the company. And I believe, you know, the creative energy is just starting.

One of the things that he's been doing is, you know, he dressed Timothee Chalamet at a red carpet event. He dressed Divine Joy Randolph for the Met Gala. How important are things like that? This sort of like little collaborations, little partnerships with celebrities to try to make the brand feel cooler and more relevant? Yeah. And Hathaway was also in that mix and there'll be many others. Yeah.

It's an important part of the relevant narrative. It's not necessarily a vital ingredient for the scale of our brand, but it's a really important part of the cultural conversation that our brands can now start to re-engage in. As I mentioned, part of our objective is to create more relevance for the brands that, if done well, drive revenue.

But I wouldn't say it's the single silver bullet to create relevance. Relevance is a complicated marketing conversation that ultimately drives your media mix model that changes very dramatically, your digital dialogue that changes pretty dramatically, the assets and creative that you create. So it's a multifaceted narrative, but certainly one that is topped off, if you will, with celebrity dressing.

Um, how much is Gap benefiting right now from the fact that the 90s are kind of back in style again? Like, how much do you think that this is what you're doing versus just the fact that trends are cyclical? Maybe there's some nostalgia for Gap, and therefore it's putting some wind in your sails?

Yeah, perhaps. But, you know, what I would what I would suggest is that there are a lot of brands from the 90s that are not feeling this nostalgia and they're not enjoying a resurgence. So I think that you've got to be able to recognize consumer trend and how to play into them.

And we are doing a good job capturing the interest of nostalgia in a way that connects with this generation. That is the art behind the business. And there are other brands today that are enjoying that with their own version of renewed relevance. But there are plenty of brands in the 90s, by the way, having lived through them, that have not necessarily seen that kind of energy.

All right, we're going to take a short break. And when we come back, we're going to talk more with Gap Inc. CEO Richard Dixon on how to ensure the momentum doesn't fizzle out and what he sees in the broader economy.

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How do you, what gives you confidence that this won't, this turnaround won't fizzle out? I mean, Gap had 15, a little over $15 billion in net sales last year, which is an improvement. It's more than 2023, but it's still less than where the company was in 2018. So what work do you feel like still needs to be done?

Well, the metrics that we shared in our last quarterly call were not one and done, if you will. We talked about we exceeded financial expectations. We grew market share. It's the eighth consecutive quarter that we've grown market share. It's a really important metric to understand because the market itself, the apparel industry, has been declining for the past two years.

We don't love that, by the way. We want to be part of a growing industry. But the facts are what they are. The apparel industry has declined over the last few years. We have grown our market share over the last couple of years. That's an indication that we are breaking through. We are resonating with consumers. Pricing, promotion, product, value, everything.

the orientation of relevance, it's all orchestrated and improving our trajectory going forward. There is no doubt that there'll be headwinds. We're dealing with them now, whether they be tariffs or a consumer sentiment. These everybody's dealing with, but it's our job to create great product at great prices with great experiences and execute with excellence. And as long as we stay true to that, there is plenty of market share to go after.

Speaking of tariffs and economic uncertainty, one of the big stories this year has been the tariffs the Trump administration is putting on countries around the world. Is there anything that concerns you about this business environment and tariffs specifically? It's all concerning, but I think it's...

It's no different than any other year of complexity. You know, we, we can, we can talk about tariffs being, you know, the, the, the challenge of, of this year, but there's been challenges every year that companies go through. Uh, and I,

You know, it's how you deal with the challenges at hand. We're working hard, obviously, to mitigate any price increases to consumers. We want to maintain that integrity of our price value. So how are you doing that? Are you importing more products right now? More materials? No.

No, no, no. We haven't changed. We haven't changed our inventory management methodology or our open to buy methodology. Currently, as I shared, you know, less than 10% of our product comes from China, which has been obviously one of the countries that has been impacted by tariffs. As Canada and Mexico have been in the limelight in the context of tariffs, less than 1% of our product comes from Canada and Mexico. By the way, that's combined. Where do your products mostly come from?

We have Vietnam, Central America, Bangladesh, other parts of the world that we've been diversifying for the last several years, our manufacturing footprint. So it doesn't make us immune to the situation, but we do have a bit more resiliency and optionality that is obviously resonating well currently with the dynamic that we're all dealing with. There are reciprocal tariffs that are being talked about being put in place, right?

Yeah.

Well, look, I think that the only place that you could assume to be encouraged with a reduction to do business would be in the U.S. I think if you spend all your time trying to chase, if you will, where the opportunity is to manufacture goods without the burden of tariffs, you're going to waste time. So is there any chance that Gap will start making jeans in the United States?

We do have some manufacturing in the United States. We do t-shirts. We have some denim. We would love to do more in the United States. And there are different teams working on that as a possibility. The size and scale of our business would preclude us from manufacturing everything in the U.S., but there are some encouraging incentives to think about as we start to

diversify our retail footprint, diversify our manufacturing footprint, and think about ways that we can grow perhaps more manufacturing in the U.S. The other thing that's happening in the economy right now is that there is consumer sentiment has been nosediving over the past few weeks. It's now the lowest that it's been since 2022. Are you seeing any changes in consumer behavior across your brands?

Well, we've been growing our business. Again, in the context of a market that's declining, we're breaking through. Our brands are growing. We stabilize them. They're starting to put up scores on the scoreboard in terms of growth. We're growing our market share. We're very conscious of the consumer. We maintained our position with the value consumer with Old Navy, and we grew the income cohort at the higher level. So you're not seeing your customers sort of move down to the more affordable end? No.

Not necessarily. There is a flight to value that exists, but the higher end consumer still wants to be associated with brand relevance, higher quality brand narratives. And I do believe because we have upped our game.

We become more relevant. We become more stylish. We become more effective in that space, that there is a migration of hire and consumers that might not have thought about our brands like Gap and Old Navy and Banana and Athleta and are now starting to be either introduced or reintroduced. So I actually believe our portfolio creates resilience in the context of where consumers are because we have a broad consumer base.

The last question I have for you is one that I'm just genuinely very curious about, which is that Zach Pozen, your chief creative officer, said in an interview not too long ago, he was quoting you. So this is a bit of hearsay. You said, I've been a Willy Wonka at Mattel and I need to find my Willy for Gap. What did you mean by that? What does it mean to be the Willy Wonka of Mattel? And why is that something that you needed at Gap?

Oh, it's a great, it's a great question. I'm not sure I loved, I loved him sharing that. But what I would say is, you know, at Mattel, Mattel is a toy company. The heart and soul of the company is about fun. It's about surprise. It's about innovation. It's about creativity. And it's about fun.

And as a leader in that company that led product design and marketing and new brand development and reinvigorating brands, you had a responsibility to be the inspiration as well as the innovation, if you will, to unlock innovation, to inspire creativity, to bring back that element of surprise and delight.

And in my personal history, Willy Wonka was this sort of

character that you just were excited around what was behind the closed door. What was the innovation that you were going to reveal? And so my role at Mattel was very much leading that creative endeavor. And as I was looking at bringing in creative talent, I referenced Zach as a

the Willy Wonka of, uh, of Gaff Inc. You do kind of, uh, remind me of like a young Gene Wilder a little bit. So I think you can, I think you fit the bill. I just need a top hat. You just need a top hat, but you got the hair already. You got the, you got the, I'm holding on. I'm holding on. I'm holding on. You've got the hair. I'm holding on. Um, all right, great. Well, Richard, thank you so much for your time. It's been a pleasure. I appreciate it, Ryan. Thank you very much.

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