Gap CEO on why he just made this big symbolic change after 55 years in business
08/22/2024 23:58
Gap makes a big change that sends a clear signal to investors.
Burying a past, but not forgetting it entirely.
Gap (GPS) officially changed its stock trading symbol on Thursday, after going public on the New York Stock Exchange on May 19, 1976: "GAP" rather than a nod to navigation system "GPS."
The move is not without symbolism attached to it.
For one, the first Gap store opened on August 22, 1969 on Ocean Avenue in San Francisco. The store — called The Gap — sold everything from Levi's (LEVI) jeans to cassettes.
And two, it marks the one-year anniversary with former Barbie turnaround master Richard Dickson at the helm of.
"To some extent it was an obvious conversation. I mean GPS or GAP, right? So there is to some extent one of those moments where you go, like, why not?," Dickson told me at the New York Stock Exchange surrounded by floor traders decked out in Gap denim and 1969 sweatshirts.
The ticker change is the latest signal sent by Dickson that Gap will respect its heritage, but aim to become competitive again by pivoting to a culturally relevant future. Shares of the 55-year old apparel retailer is up more than 135% since Dickson took over.
After a lengthy search, Gap named the former Mattel (MAT) COO as CEO, effective August 2023. Dickson, who sat on Gap's board before the appointment, was one of the executives behind the resurgence of Barbie, helping bring the doll to movie theaters last year.
Since assuming the head job, Dickson has been on the road, visiting distribution centers and stores while meeting with top decision-makers at the retailer. The group diagnosed habitual issues (clunky website, less-than-cool products, supply chain inefficiencies) that had long plagued the company's performance and stock price.
He's also made several key hires such as celebrity fashion designer Zac Posen to lead design, which has begun to bear fruit in the form of red carpet appearances for Gap clothing.
"We've spent a lot of time driving our strategic priorities, bringing back financial and operational rigor, enabling us to reinvigorate these brands to the extent that we could revitalize them and be part of the cultural conversation," Dickson said.
"Great product, great price, great storytelling, great store experiences. These are all fundamentals that we're working really hard to fix."
Dickson's efforts have begun to bear fruit in a few areas.
Take the websites of Gap and Old Navy, which now play videos on the header of the respective chain's latest marketing campaigns. The company has gotten out in front of the baggy denim look this fall — getting out in front of any trend hasn't happened since famed CEO Mickey Drexler led the company eons ago.
And Gap is cutting through the clutter online with the grabby marketing Dickson is known for — such as allowing baby goats to roam around the halls of the company's Athleta sportswear brand. "GOAT" is also a nod to greatest of all time.
Gap's first quarter also showed sales gains at its namesake division, Old Navy, Banana Republic, and Athleta alongside a healthy earnings beat.
The company will report its second quarter results on Aug. 29.
"We anticipate a big 2Q EPS beat of $0.50, driven by stronger gross margin and slightly stronger sales vs consensus. Despite solid GM expansion in 2H23, we see opportunity for GPS to pull back on promos at all brands in 2H24, driving GM upside vs cons even as product cost tailwinds abate. With sentiment mixed on GPS, we believe the risk/reward is favorable into 2Q EPS," Citi analyst Paul Lejuez said in a client note.
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