The executive who revived Barbie has a new long-shot mission: Save Gap

The third store had the hoodie but not in his size. “Who doesn’t have a medium?" said Richard Dickson, who was hired as Gap’s chief executive in August, after joining its board in 2022.

His next calls were to the managers of his planning, merchandising and store teams to say: “Whoa, this is not a good experience for our customers."

The company that once reigned over American casual fashion has bungled the fundamentals of retailing for years. Its profits have halved over the past two decades as sales have slid. Even if its stores were perfectly stocked, it’s still facing a crisis that has simmered for decades.

Its Gap, Old Navy, Banana Republic and Athleta chains have been outmaneuvered on all sides, from discount stores like Target and fast-fashion brands like Zara and Shein that offer trendier products at lower prices to rival specialty retailers like American Eagle and Lululemon Athletica that have wooed away shoppers with higher quality and better styles. All of which means Dickson must grapple with what might be the most fundamental question possible for a retail CEO: Why do his brands exist?

‘Fashion is entertainment’

The 56-year-old Dickson is the latest in a long line of Gap leaders attempting to find an answer. He is trying to reconnect with people who remember the flagship Gap brand from its heyday in the 1990s as well as younger shoppers who have no recollection that a white Gap T-shirt and pair of khakis once defined a generation.

Before leading the San Francisco company, Dickson spent nearly two decades, on and off, at Mattel, where he was most recently chief operating officer and helped resurrect another antiquated brand: Barbie. He started by cleaning up what he called “brand goulash." Instead of 17 shades of pink, Dickson zeroed in on one, making Pantone 219 the official Barbie color. He gave Barbie new skin tones and body shapes and a publicity blitz with life-size Barbie Dream Houses and models in Barbie clothes on the runways at Fashion Week. The pièce de résistance: last summer’s blockbuster “Barbie" movie.

A month after the movie hit theaters, Dickson, who served as an executive producer, went from hobnobbing with stars Margot Robbie and Ryan Gosling to running a company that sells clothes his own children didn’t even wear.

“Fashion is entertainment," Dickson said. “The story around a brand and what it stands for is more powerful than any one product."

At Gap, he has zeroed in on small things, like replacing sleepy store music with happier tunes, and made some bold moves. In February, he hired a new creative director: fashion designer Zac Posen, who is trying to use his star power to generate excitement around the brands. He designed a denim ball gown that actress Da’Vine Joy Randolph wore to the Met Gala earlier this month.

Parts of Dickson’s turnaround plan have been tried at Gap before, such as hiring designers and collaborating with musicians. That shows how difficult it is to revive a fashion brand whose moment has passed. But it can be done. Abercrombie & Fitch, for instance, reinvented itself over the past few years. The one-time bad-boy retailer, known for shirtless male models and sexualized marketing, is now a darling of career-minded millennials.

“I’m not sure Gap will ever be able to recapture what it once was," said former Estée Lauder executive John Demsey, who has known Dickson for more than three decades and is a big fan.

Demsey said his 16-year-old daughter wouldn’t set foot in a Gap store. If anyone could change her mind, it would be Dickson. “Richard knows how to create buzz around a brand," said Demsey, who is now a senior adviser to L Catterton, a private-equity firm backed in part by LVMH.

A cultural sensation

The first Gap store opened in San Francisco in 1969, the brainchild of real-estate developer Don Fisher and his wife, Doris, who pooled $63,000 of their savings to launch the company. The stores originally sold Levi’s jeans, records and cassette tapes. An early idea for a name was Pants and Discs until Doris came up with Gap, as in generation gap. Their three sons, Bob, Bill and John, still control about 40% of the company’s stock; Bob and Bill sit on the board.

Gap stores expanded nationwide and by the 1990s, under the leadership of Mickey Drexler, it had stopped selling Levi’s to focus on its own private-label clothing. Its casual style dovetailed with America’s move away from formal dressing and it became a cultural sensation. In 1992, the cover of Vogue’s 100th-anniversary issue featured supermodels dressed in Gap white button-down shirts and jeans. In 1996, Sharon Stone wore a $26 Gap black mock turtleneck to the Academy Awards.

Its advertising was the stuff of legend. There were dancers grooving in khaki pants and luminaries from Spike Lee to Joan Didion captured in black-and-white photographs wearing Gap clothes, styled with their own spin. It was spoofed in a recurring “Saturday Night Live" skit in which David Spade, Adam Sandler and Chris Farley played gossipy female Gap employees and in movies like 1994’s “Reality Bites," in which Janeane Garofalo says: “I’m manager of the Gap. I’m responsible for all those T-shirts."

Drexler turned Banana Republic, which the company bought in 1983, from a safari- and travel-themed retailer into a purveyor of suits and other upscale clothes. He launched Old Navy, named after a Paris bar, in 1994, stocking it with Gap-like styles at a discount.

By 2002, with sales slumping at all three chains, Drexler was out. Customers complained about eroding quality and felt some styles were too adolescent after edgier designs replaced classics.

The company spent the next two decades cycling through leaders who had almost no fashion experience—there was a former Walt Disney executive, a Canadian drugstore chief and a one-time management consultant. Without a clear vision at the top, the brands seesawed from one idea to the next. One year, the Gap brand tried to compete with fast fashion by selling price-friendly clothes. The next, it courted wealthier shoppers with $600 leather jackets. They sold stuff, rather than an identity.

Meanwhile, Drexler worked his magic at J.Crew, turning the stale retailer back into a destination for a preppy-with-a-twist lifestyle.

Gap’s sales fluctuated over the next two decades. For the 12 months that ended January 2022, sales totaled $16.7 billion. As of the most recent year, they had fallen to $14.9 billion. The company was slow to move away from the comfy clothes popular during the Covid-19 pandemic, and Old Navy stumbled when it tried to make clothes for all body shapes, but it also has been retrenching. Since 2020, it has closed more than 340 Gap and Banana Republic stores in North America and eliminated roughly 2,300 corporate jobs. It has more than 3,500 company-owned and franchised locations worldwide. Gap is scheduled to report quarterly results on May 30.

Gap’s shares are down 59% from their all-time high of $52.88 in February 2000. The stock is up about 3% this year and closed Friday at $21.60 a share.

‘Swings and misses’

Dickson is in stores constantly and one thing that irked him right away was the sleepy music. “It was like spa music," Dickson said. “We should be playing music that gives you a bump in your step, that when you try something on, makes you feel like you have a little attitude." He directed his store managers to play happier music and turn up the volume.

On a subsequent store visit, the music was snappy. It was also earsplitting.

“It’s very loud," Dickson recalled telling a sales associate, who didn’t know he was the CEO.

She agreed that the music was loud, he said.

“Why don’t you turn it down?" he asked her.

Because she was under strict orders to turn it up, the sales associate responded.

“You know best," Dickson told her. “Tell those corporate people you had to lower the music."

Dickson says the prolonged downward spiral has damaged the collective psyche of Gap’s workforce. “There have been a lot of swings and misses, and that creates a cautious culture," he said.

“When we walk into a store, why can’t we stand here and go, ‘Oh, my God, it’s horrible?’ " Dickson said. “Let’s have the moment and then we can say, ‘OK, what are we going to do about it?’ "

To spur creativity, Dickson urges staffers to leave their offices and immerse themselves in popular culture. When Gap brand chief Mark Breitbard was in Tokyo recently, Dickson arranged for him to spend the day with a guide who took him to galleries and introduced him to artists.

“Richard is obsessed with us moving at the pace of culture," said Breitbard. “If we’re stuck in our own four walls, we’re not going to do it."

‘Linen moves’

Dickson said the secret to building brands is to give them a strong point of view, make relevant products and then market them in a way that creates emotional connections with consumers. He’s applying that playbook in his new job. One of his first moves was to huddle with his leadership team to figure out what made each of the brands special. For the Gap brand, they decided, it was originality and self expression.

“We weren’t packaging and creating narratives for consumers that got them interested," Dickson said. “We were selling a treasure trove of stuff. Customers were driven by price, not by the style or the trend."

When Gap designers showed Dickson some linen pieces, the CEO challenged them to make linen the centerpiece of the brand’s spring collection. Gap re-created the hit music video “Back on 74" by the dance troupe Jungle—except in its version, which also features Grammy-award winning singer and songwriter Tyla, the dancers are wearing its linen shirts and pants. For this contemporary update of the 1990s khakis ads, Gap let the dancers choose what to wear and how to style the clothes.

Dickson said the campaign called “Linen Moves," which made its debut in late February, has generated the most followers, the most likes and the most views on social media in the brand’s history.

To avoid mistakes made by his predecessors, when products were advertised before they arrived in stores, Dickson made sure all locations had big linen displays. The first thing people see when they log onto Gap’s website are models wearing linen—not a bunch of discounts.

“You want customers to be drawn to the product, not overwhelmed by promotions," he said.

A controversial hire

One of Dickson’s more surprising decisions was hiring Posen as the company’s creative director and the chief creative officer of Old Navy.

The 43-year-old Posen had been a boy wonder of fashion, having started his own label in 2001 after attending London’s Central Saint Martins college of art and design. The New York City native became a favorite of celebrities, making red-carpet gowns for Kate Winslet and Reese Witherspoon, among others. He closed his eponymous fashion label in 2019 after failing to find new investors or a buyer.

“There were people who wondered, am I going to come in here and paint the building pink or design a three-legged jean?" Posen said, while getting fitted for the double-breasted Banana Republic suit made of Italian wool and washed satin that he would wear to the Met Gala.

Despite his pedigree, he has a history of playing to the masses. He created a limited-edition clothing line for Target, bridal gowns for David’s Bridal and uniforms for Delta Air Lines.

Posen and Dickson had known each other for several years. They reconnected in October at Balthazar, the Manhattan brasserie, where they shared french fries and discussed what it takes to build fashion brands. “It was like kismet," said Posen, who has relocated to San Francisco. “I knew within the first five minutes that we would work really well together."

At Old Navy, Posen leads the design, merchandising and marketing teams. Although he is on the executive leadership team of the parent company, he isn’t setting the design agenda for the other brands. Rather, he helps them dial up the style and creative juices. During a review of Banana Republic’s fall line, Posen seized on a sweater that he thought would be a big seller and urged the team to produce it in more colors and styles.

He also acts as a godfather of sorts when it comes to talent collaborations, making introductions and steering the brands toward cool, relevant people who fit their aesthetic.

“You have to be a giant antenna and have your fingers across all industries to feel the pulse," Posen said. “Then you have to know where you play into it and where to play against it—like playing chess and Uno at the same time."

Write to Suzanne Kapner at suzanne.kapner@wsj.com