Gap Inc. (NYSE: GPS) has hired Mattel President Richard Dickson to be its new chief executive officer. It was time for him to leave Mattel. His boss, Ynon Kreiz, board chair and CEO, is only 58. Dickson, who is 52, could be over 60 if he ever gets the top job. (These companies have the worst reputations.)
Gap said that hiring Dickson was a stroke of genius because of what he had done for the Barbie brand at Mattel. He is a wonder at transforming brands, they said. However, clothes are not toys, and Mattel does not have over 3,400 stores.
The Gap’s stock has fallen 66% in the past five years, as the overall market has risen 62%. Gap has failed time and again to turn itself around. Based on its mix of brands and the movement of customers away from them, it may be that the retailer cannot be fixed at all. After all, the retail industry is littered with large retailers, like Sears and J.C. Penney, that could not be saved. This has been blamed on poor management. However, it could just as well have been brand fatigue.
Gap’s most recent quarter shows how troubled the company is. And it looked very much like many of the quarters that preceded it. Revenue dropped 6% to $3.28 billion. Same-store sales were off by 3%. Revenue at two of its three most important divisions collapsed. Revenue for Gap dropped 13% compared to the year before to $692 million. Some one-time events affected the numbers. Banana Republic’s revenue, which once looked like Gap’s best brand, dropped 10% to $432 million.
Gap lost $17 million in the most recent quarter, an improvement from a loss of $162 million the year before. The most depressing section of the earnings report was the forecast: “The company continues to anticipate that fiscal 2023 net sales could decrease in the low to mid-single digit range compared to last year’s net sales of $15.6 billion.” Once again, this figure has some one-time adjustments. Nevertheless, it is awful news.
Dickson gets to sit in a CEO seat. He probably will regret his decision. Being number two at Mattel is a good job.
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