The Quest to Fix the Gap

Can the iconic ’90s retailer finally make a comeback—and survive tariffs?

By Amanda Mull and Lily Meier

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Episode Transcript

Speaker 1 (00:00):
The quest to fix the Gap? Can the iconic nineties
retailer finally make a comeback and survive Tariffs? By Amandemul
and lillly Meyer Read aloud by Mark Leedorf. When you're
inside the GAP's headquarters, the grand Promise of California stretches
out to the horizon in every direction. The building is

(00:23):
situated on an almost unfathomably valuable patch of real estate
near the foot of the San Francisco Oakland Bay Bridge,
where between the building and the bridge, a giant bow
and arrow sculpted by Klaus Oldenburg and Koshevan Brugen plunges
down into the shore, as though an unseen goliath is
taking aim at China through the center of the Earth.

(00:43):
It was commissioned more than two decades ago by GAPS
founders Doris and Donald Fisher, part public art, part de
facto insurance policy for their company's panoramic view of the bay.
On the afternoon of April second, as American retailers fretted
privately over the tariff plan that President Donald Trump was
due to unveil on a big, beautiful piece of foam board,

(01:06):
this is the view that framed Richard Dixon in one
of the company's conference rooms. Dixon is the company's fifth
chief executive officer since retail legend Millard Mickey Drexler's ouster
in two thousand and two, which precipitated a more than
fifty percent revenue decline from a mighty seven point three
billion dollars for its namesake brand since two thousand and three.

(01:27):
He's also the only GAP CEO who, at this point
in his tenure cannot be accurately described as embattled at
a company that's been promising a return to glory for
both shoppers and shareholders since the George W. Bush administration.
The early results suggest a turnaround might finally be in
the offing. As long as GAP can get its clothes right,

(01:48):
wean the public off constant discounting, figure out what mall
shoppers want from its stores, and claw its way back
toward the top of the culture. No problem right. It
was in this moment of opt that Dixon was waiting
for a trade war's opening salvo to land. We have
five percent market share in the American clothing market. There's

(02:08):
plenty of business to go out and get even in
a declining market. Even when people say, well, how's the consumer,
the sentiment, the challenges, says Dixon, slender and tall and
with a wardrobe full of studiedly unfussy Banana Republic sweaters
and jeans. This year, it's tariffs. Next year it's something else,
his voice rising in a nasal faux panic. The red sea,

(02:30):
the blue sea, It's constant. That, of course, is what
any ceo worth his compensation package is supposed to say
in the minutes before a disaster of indeterminate magnitude is
set to strike his industry. But in the moment, in
the kind of setting that forces you to remember, gap
can still marshal the resources of a great American company,
not just the view but the walls lined with black

(02:53):
and white ads showing some of the coolest people to
ever live wearing clothes that decades ago changed global face.
It seems almost reasonable. By the time we exited the
conference room, though, the tariffs were real, real and bizarre, haphazard, onerous,
seemingly designed to collapse as many US consumer businesses as possible. Dixon,

(03:16):
he tells us several weeks later, had immediately gotten on
the phone with the company's chief financial officer and its
chief supply chain and transformation officer to start working through
potential scenarios for dealing with a much different set of
duties than the industry had anticipated. What if we increased
production in the US? Why not, he asked, enumerting some
of the possibilities on the table. What if we diversified

(03:39):
our footprint even more? What if I went to the administration?
Dixon and GAP's government affairs team traveled to Washington several
times to do just that. They talked to tariffs both
directly with Trump and with congressional leaders, and discussed the
potential for store closures. The intent is good, but the
reality of that of executing in our the category is limited,

(04:01):
he says, referring to the quixotic task of bringing the
garment and textile industries back to North America in any
meaningful way. This type of tariff torment is hardly unique
to GAP. Any company that sells physical goods has been
forced to take a frantic look at its manufacturing, sourcing,
and logistics operations and tried to triage. In GAP's case,

(04:24):
that means hedging the retailer's import and product bets. And
in its May earnings call, Dixon said the company aimed
to diversify its overseas suppliers and ensure that no one
country accounts for more than a quarter of its goods
by the end of twenty twenty six. In fiscal twenty
twenty four, Vietnam was the only country above that threshold,
at about twenty seven percent. By the end of this year,

(04:47):
Dixon said, imports from China, which as of twenty twenty
four accounted for less than ten percent of GAPS assortment,
will be reduced to less than three percent, and the
company planned to double its sourcing of American grown cotton
in twenty twenty six. This is one of those moments
that is going to require more patients, which Dixon admits
he doesn't always have. GAP has been getting more traction

(05:10):
with shoppers of late, he says, but this is a
factor that potentially, will you know, impact certain parts of
our momentum. During the same earnings call, investors got a
first look at what that impact might be. The retailer
shared that it was expecting as much as three hundred
million dollars in additional costs in the twenty twenty five
fiscal year, though planned mitigation efforts should reduce that by

(05:33):
up to one hundred and fifty million dollars. The remark
sent the company's stock into freefall, ultimately down about twenty
percent by the time the market opened the following day.
Other retailers have issued similar warnings after pulling its guidance
for the fiscal year. Earlier in May, American Eagle Outfitters,
which has about a third of the annual revenue of GAP,

(05:54):
said it expected around forty million dollars in teriff related costs.
Abercrombie and Fish, similar in size to AEO, predicted a
fifty million dollar hit. US clothing retailers have been in
a state of decline for decades, Like plenty of others.
From its nineteen nineties heyday, gaps rise and long humbling

(06:15):
largely mirror the ascent and demise of the mid tier
suburban mall. As foot traffic was disappearing. In the mid
two thousands, the brand got battered from all sides. European
fast fashion companies such as H and M, Target submitting
itself as a force in affordable fashion, and uniclosed Japanese basics.
But many of GAP's problems have been a self inflicted

(06:37):
jumble of nonsensical resource drains, bad investments, and failed concepts.
Piper Lime its attempted Zappo's competitor, shut down in twenty fifteen.
In twenty twelve, Gap tried to get into the high
end apparel market by buying the boutique chain Intermix, which
went nowhere. Gap offloaded it to a private equity firm

(06:57):
in twenty twenty one. Then there were the Great Yeasy
Depical of twenty twenty two, in which a planned decade
long collaboration with the rapper formerly known as Kanye West
collapsed in a humiliating heap of ninety dollars hoodies. Through
all these corporate side quests and quite frankly too many
others to list, what suffered was the thing people actually

(07:19):
wanted from Gap, the clothes. While the retailer was looking
to join new markets, or clothes underperforming stores, or bulk
up its e commerce operations, it seemed to forget that
its core competency is or was, designing, cool, affordable, every
day apparel. In the past year or so, the necessary
cleanup of the company's finances and logistics operations seems to

(07:42):
have finally paid off, just as the chain's clothes are
starting to attract the attention of both teens on TikTok
and the elder millennials nostalgic for GAP's golden age, who
can actually afford eighty dollars genes at full price. If
you squint, you can sort of see how a company
like GAP might be well positioned to weather and perhaps

(08:03):
even benefit from the kind of direct hit to the
industry that the Trump administration has so far outlined. Closing
the Deminimus exception, which waives tariffs on imports valued at
eight hundred dollars or less, has given US clothing retailers
some relief from the lowest price competition with Timu and Shine. Amazon,
which relies on third party sellers, a significant portion of

(08:25):
whom Er oversees, could suffer. Smaller, less resource rich American
businesses are at real risk of getting gutted too. Meanwhile,
Gap orders inventory at a scale that encourages its existing
production partners, some of which the company says it's worked
with for more than thirty years to prioritize its needs,

(08:46):
and if it wants to find new production capacity elsewhere
in countries with less of a tariff target on their back,
it can box out most of its competition. It may
be a business that's endured decades of missteps, failures, and contraction,
but it's still bigger than the vast majority of companies
selling similar products to US consumers Right now, Dixon just

(09:06):
needs to make sure while steering all this that he
can also capture the more intangible thing that's just as vital.
We've been around for fifty five years, he says, and
we want to be around fifty five more. That Gap
still exists at all is itself a minor miracle. Brands
don't have limitless lifespans, especially in an industry as fickle

(09:29):
as fashion, and GAP's obituary has almost been written many
times over the past decade. American's nostalgia for mall retailers
hasn't helped many of them survive, most having faded into
either obscurity or, more likely, bankruptcy court. The first Gap
store was opened by the Fishers in the countercultural hotbed

(09:49):
of nineteen sixty nine San Francisco, selling levies and records
to the city's cool kids. In the following years, they
opened dozens of stores and began developing their own low
cost clothing lines. They took the company public in nineteen
seventy six and eventually jettisoned the third party products in
favour of their own. The next twenty five years were

(10:11):
stunningly successful as a casualizing country turned to new suburban
shopping malls, which sprang up as quickly as developers could
get the stucco to set in search of jeans, khakis,
and T shirts. That was thanks in large part to Drexler,
whom the Fishers hired in nineteen eighty three. The same year,
the company bought a Safari themed retailer named Banana Republic.

(10:33):
Among other consequential decisions, Drexler cleared out the previous decade's
private label experiments. Inside Gap, there would be only one brand.
Informal but crisp, easy but traditional, preppy but not too preppy,
the quintessential basics of American dressing. The clothes threaded a
very tricky needle, satisfying mall shoppers while being cool enough

(10:55):
for the fashion and entertainment elite. In nineteen ninety two,
a gaggle of supermodels covered Vogues one hundredth anniversary issues
swathed in the company's white jeans and button downs. Sharon
Stone wore Gap pieces on the Oscar's red carpet. Twice. Meanwhile,
GAP's ads became art in their own right, black and
white photos by Herbritz, Annie Leibovitz, and Patrick de Marchillier

(11:19):
featuring cultural icons such as Spike Lee and Joan Didion.
Historical shots of Amelia Earhart and Muhammad Ali cleverly repurposed
to sell Khakis TV commercials that felt more like music videos.
A nineteen ninety eight profile in Fortune magazine speculated that
Drexler just might be the most influential person in American fashion.

(11:41):
Inside the company, though pressure was mounting from lower priced
competition aping the GAP model, and a bloated fleet of
aging stores was beginning to feel less hip. Drexler found
some fixes, most notably launching the less expensive Old Navy,
which buffered the company from the more aggressive discounters. Gap
the brand might have lost those sales, but Gap the

(12:03):
company kept the market share. The strategy has been effective
beyond what anyone could have predicted. It took only a
few years after its debut for Old Navy to reach
one billion dollars in annual sales, and in the brand's
most recent fiscal year, it brought in eight point four
billion dollars compared with the Gap brand's three point three
billion dollars. Even so, by two thousand and two, investors

(12:27):
had grown restless and wanted new leadership. The company's financials
were messy and debt laden, and sales had been declining
for two years. Drexler was fired. The next year, Gap
posted what are still its best sales numbers by selling
the clothes that Drexler, by then CEO of j Crue,
had ordered into production before being shown the door. Drexler

(12:49):
declined to comment. The less that's said about what's transpired
since the better Gaps had just a string of different leaders,
like a revolving door of leadership. Mark Breitbard, who joined
the company for the first time in nineteen ninety seven
and in twenty twenty was named president and CEO of
the Gap brand. This is where we acknowledge, not for

(13:10):
the last time, that it's a little confusing that the
company shares a name with one of its brands. Breitbard
isn't quite a Gap lifer, but close over the years,
tasked with some clean up at three of the company's
four brands. The outlier is Athleta, the activewear line it
acquired in two thousand and eight. In other words, he's

(13:30):
seen some things. Gap had more fundamentals to fix, he says,
broken international markets, stores that were unprofitable, SKU proliferation, lack
of focus, lack of big ideas. Every time the company
hired a CEO, it was with the promise each would
solve a diagnosed problem, to bulk up the e commerce operation,

(13:53):
to close stores, to get out of bad mall leases,
to improve margins. After Drexler came Paul Presler, previously a
Walt Disney theme park exec, who oversaw cost cuts and
declining creativity. Next was Glenn Murphy, who'd previously run a
Canadian drug store chain. He too was heralded as a

(14:13):
cost cutter, and he implemented store closures and ultimately declines
in product quality. The Murphy era had a few bright spots,
such as a successful bet on colorful genes in the
early twenty tens. He retired in twenty fifteen. Next, Art Peck,
a former management consultant who, among other things, had been

(14:33):
running GAP's digital division. He lasted until twenty nineteen, during
which time he closed hundreds of stores and made the
company even more reliant on discounting. In early March twenty twenty,
came the unfortunately timed arrival of Sonya Single, previously the
head of Old Navy, whose tenure was immediately thrown into
chaos by the pandemic. She left in mid twenty twenty two.

(14:57):
Presler defends his tenure emphasized as he accomplished what the
board asked him to. Murphy Peck and Single didn't respond
to requests for comment. Dixon's first encounter with Gap began
when he was still fully enmeshed in Barbie Mania, unleashing
one hundred brand deals or collaborations connected to the movie.
After he'd worked a total of nearly two decades at Mattel,

(15:20):
he was contacted to consider joining the GAP board. He
was intrigued by the high stakes. I haven't been to
a GAP in a really long time, and when I
looked at it online, I was like, it's lost the narrative,
and then of course when I looked at the business,
it was really not good, says Dixon. For me, that
was the draw. Pick me, pick me, I'll jump in

(15:42):
the fire. He joined the board in twenty twenty two,
just as the Yeasy collab imploded. By the following year,
GAP was still looking for a CEO to replay single,
and with the Barbie movie about to premiere, Dixon decided
he was up for the Rehab job, even though he
was a toy executive. The board was impressed with his
combination of creativity and financial discipline, according to a person

(16:06):
familiar with the process who asked not to be named
because the matter was confidential. Yet, Dixon was hardly a
stranger to apparel. He grew up in New York City
with parents who were both in the fashion business. At
one point, his father served as CFO at Calvin Kleine.
His first job after college was at Bloomingdale's, where he

(16:26):
broke her to deal with a group of the city's
private schools to design a line of uniforms for students.
He went on to co found and then sell a
dot com era online cosmetics retailer, and become an executive
at the apparel company Jones Group. Always with an eye
toward branding, one of Dixon's first acts as GAP CEO
was to take his new leadership team on a shopping

(16:48):
trip to gap dot com. He wanted them to see
with fresh eyes what bugged him about the experience, how
discounting schemes sometimes several overlapping at once had usurped them
close as the brand's focal point, which had been a
problem for years. With the exception of that twenty tens
big bet on brightly colored skinny jeans, it was hard

(17:10):
to recall a single moment in the past couple of
decades when GAP's clothes got people excited. Instead, the retailer
relied on deep, constant discounts to keep mediocre clothes moving.
You were like, I don't even see the product anymore
because you're bombarding me with what looks like anxiety, Dixon says.

(17:30):
As the company's new leader, he also noticed something askew
among his staffers, an unrealistic culture of positivity. I sit
in meetings and they're all telling me how great things are,
and they're not, like they're just not great. So I'm
fascinated at this culture that presents with such great positivity
and optimism. But then you look at the business, you

(17:51):
go to our stores, you go online, you hear the
drum beat in the outside world, and they think very differently,
says Dixon. At a town he presented all the negative
headlines from the brand's recent press. I said, it's unbelievable
everybody seems to know what to do but us, and
you read the articles and they're not wrong. He wanted

(18:13):
an environment where people felt compelled to identify failures, be
honest about them, and move forward. I'm very transparent to
the extent that it can be somewhat uncomfortable, he says externally.
The biggest boost to the company's image in Dixon's earliest
days came from a splashy hire, the February twenty twenty
four appointment of designer Zach Posen. Posen, who rose to

(18:36):
fame in the twenty tens on the strength of his
red carpet gowns and his charm on project Runway, is
now executive vice president and creative director for Gap, as
well as chief creative officer at Old Navy. He joined
a company that had brought in flashy creative heads, one
poached from a French fashion house, another with minimalist Scandinavian

(18:57):
cred only to then fire them or eliminate their roles entirely.
So far, Posen's creative director title at Gap has caused
confusion the press, crediting him for elements of both the
company's and the Gap brand's overall performance. Even though he
doesn't have much to do with the latter. His official
corporate bio vaguely describes him as a cultural curator and

(19:20):
creative partner to Dixon. In addition to the more straightforward
design and product oversight duties you'd expect from Old Navy CCO,
Posen's most obvious public role has been in celebrity relations,
creating custom GAP branded looks for a listers, including a
red carpet get up for Demi Moore and a met
Gala look for Divine Joy Randolph. Asked about Posen's role,

(19:44):
Dixon says he's bringing more design nerds into the company
through his recruiting skill set, bringing more interesting people into
the cultural conversation based on who he knows and how
he navigates in the culture. He also says Posen's role
has been a boon to GAPS marketing efforts. Posen wasn't
made available to Bloomberg BusinessWeek for an interview, but we

(20:05):
did see him at the company's Tribeca offices. Dressed like
an old timey aviator. He smiled and waved as he
passed our conference room. At Old Navy, Posen has overseen
the release of a hit occasionware collection inexpensive party dresses
and taffeta skirts with matching crop tops for when you
don't want to spend two hundred and fifty dollars to
attend a wedding, the development of which was already in

(20:28):
progress when he joined the company. Where his esthetic influence
is most visible, though, is at Gap Studio, a separate
new line with a more fashioned, forward sensibility and slightly
higher prices, where Posen has a design staff of his own.
Its one collection so far features things such as corset
belts and nipped waist trench dresses, as well as a

(20:50):
reproduction of a virally popular off the shoulder shirt dress
he created for Nn Hathaway to wear to a twenty
twenty four Bulgary event in Rome. Received an uneven reception
from critics and shoppers. The clothes, however, are not right,
wrote Lauren Sherman of the first Gap Studio collection in
line sheet her Puck newsletter on the fashion industry. Nobody

(21:14):
wants a denim trench or a two purple navy blue
bubble skirt, even if it's cute from the Gap. You
know what they want a T shirt. Fetishize the T shirt.
We'll be right back with the quest to Fix the Gap.
Welcome back to the Quest to Fix the Gap. Baryl jeans,

(21:39):
with their exaggerated curved legs that resemble a bow legged
cartoon cowboy, are the opposite of an obvious crowd pleaser.
If you walk into a Gap store now, the preponderance
of Baryl jeans, along with their even more exaggerated sister look,
the horseshoe gene, styled with everything from tiny tank tops
to oversized Oxford's, should be your first hint that things

(22:01):
are a little bit different to the brand. About a
year ago, Gap finally rushed into a trend at the
exact right moment for its shoppers. We had a barrel
fit two years earlier that we tested, and it didn't
test well because we were too early, says Gap president Breitbard.
It worked okay in Japan, but it didn't work in
the US. For years, Gap has had an uneasy relationship

(22:25):
with fashion trends, either betting big on things that didn't
end up catching on and then heavily discounting them, or
not being able to get of the moment designs into
stores quickly enough to capitalize on spiking interest. But with
these genes Gap finally managed to capture a little bit
of the magic it had at its peak, translating an
edgy look into something approachable for a much wider swath

(22:48):
of Americans. We kept playing with it, and when the
trend was there, we were ready to go. Brightbard says.
There was also an unexpected upside. Turns out, when you
wear jeans that balloon out, you need to offset them
with some snug new tops, which boosted the average order
size when customers purchased baggy jeans. When Dixon arrived, some

(23:09):
of the company's hard rehab work was well under way.
Richard comes in and a lot of the heavy lift
that's the ugly part, had been done, says Breitbard, adding
that all the flames were embers ready for gas to
be poured on them. I feel that that's Richard's strength,
coming in and taking these ideas and just making things
much bigger and more explosive. For years, one of Legacy

(23:32):
Retailer's biggest challenges was their reliance on the old school
fashion calendar, which required them to design and order products
six months to a year in advance, leaving them flat
footed in the face of fast fashion companies that could
pounce on trends. Bright Bard changed that. Now, rather than
being locked into designs, the brand chooses textiles early in

(23:54):
the product development process, then waits as long as possible
to decide which styles they'll be made into. Along with
this newfound flexibility and speed, the company can also test
smaller batches of products with real customers before committing to
larger orders. Right now, it does feel like we're bringing
back that esthetic intelligence, that voice of taste, says Calvin Leung,

(24:17):
the brand's head of creative. Of course, telegraphing taste requires
more than product. In twenty twenty three, Gap cast Venita
Carter for the kind of photoshoot that's long been a signature,
a spare portrait against a gray background. Dressed in baggy
men's jeans, a gray hoodie layered over an oversized button down,
and a logo trucker hat. She looked the part of

(24:40):
the too cool GAP icon, But unlike her nineties predecessors,
Carter isn't mainstream famous. She's a stylist and jewelry designer,
mostly unknown to the public, but whose fashion world cred
sent a sharp signal to taste makers who can get
a Gap is back. Rumor going among their friends and followers.
We were getting a lot of interesting questions from the

(25:02):
right people about like, wait, what's happening, And that was
before there was any big story. Brightbard says that growing
buzz has also been aided by recent collabs with smaller
culty brands in the past few years. That's included the
zoomer beloved sweatshirt brand Mad Happy, the glam hippie women's
label Cult Gaia, and Doan, a Los Angeles based label

(25:25):
known for its feminine details and romantic sundresses. Gap reached
out to Doen in twenty twenty three, before Dixon was
elevated at the top spot. According to Doenn CEO Margaret Cleveland,
who along with her co founder and sister, had formed
their understanding of casual American fashion in GAP's heyday, we
all were already following the Instagram Gap playlist accounts and

(25:49):
obsessed with old Gap creative and campaigns and portraiture as
part of our visual points of reference, she says, referring
to popular social media accounts run by fans who come
filed digital odes to the Gap of yore. If anyone
at Doen had questioned GAP's reach after decades of shrinking sales,
the collaboration's first release in May twenty twenty four ended

(26:12):
those doubts. Many of the products, including a one hundred
and fifty eight dollars islet embellished midi cotton dress, sold
out in the first few days. Meanwhile, the La brand
had its biggest day of web traffic ever, even though
the co branded products were available only through Gaps sales channels.
When the two brands paired up for a second drop

(26:32):
this past May, Doan enjoyed its best ever sales week.
And for Gap, you're driving traffic in relevance, but you're
now driving new customers to be interested in your basic
core proposition that probably weren't there before, says Dixon. Cleveland
says the biggest change she's seen from the partnership is
from women her age, mothers of young kids, who'd mostly

(26:55):
seen GAP as a place to get adorable clothes for
babies and toddlers and might not have bought anything for
themselves there since college. Indeed, on Mother's Day, a young
mom pushing an infant and a stroller on the sidewalk
of a leafy Brooklyn neighborhood was spotted wearing both the
Gap doan Ginghams shift dress and the matching chore jacket.
Breitbard says that three years ago it was mostly GAP's

(27:17):
executive team reaching out for collaborations. Now, he says, brands
are largely coming to Gap first, but a multi billion
dollar chain can't exist on collabs alone. Casey Lewis, a
trend analyst and author of the after School Newsletter, which
dissects Generation Z consumer behavior, says the clothes she's seen

(27:38):
get the most traction among young shoppers is stuffed there discovering,
and not necessarily from what Gap is advertising most widely.
She mentions one fair Elish cardigan that made the rounds
online last winter. It was not something that you would
see in any of the Gap imagery, but it went
super viral and sold out. She says, young people are

(27:59):
finding these items, and they're digging for them, and they're
posting about it. A few days after we spoke, Lewis
had a quasi viral Gap moment of her own. She
made a TikTok video about a linen Blend s court
embroidered with little summer objects, a beach umbrella, a seashell,
a pair of green fish. The clip now has more
than three hundred thousand views, and the scurt sold out

(28:22):
and was eventually re stocked. In February, New York Magazine's
popular shopping recommendation site, The Strategist, declared a gapissance. Leandra
Medine Cohen, a long time fashion influencer, sent out an
edition of her newsletter proclaiming that gap is where it's at.
The brand's buzzy commercial with white Lotus star Parker Posey

(28:43):
prompted a round of press and Posen dressed Timothey chalameat
the Internet's favorite celebrity in a custom gap studio look
for the Academy Awards nominee dinner. Turning around a company
with a half century plus of history, tens of thousands
of employees, and more than fifteen billion dollars in annual
revenue is by no means a straightforward proposition, But if

(29:06):
you were going to try it, this is probably what
you'd hope it looked like. Then, just a few weeks later,
the tariff bomb went off. It brought with it a
retail environment far shakier and more uncertain than when Dixon
took the job. No one knows what the ever changing
tariff regime will ultimately look like, or indeed whether it
will ever actually cease changing, which can make planning to

(29:29):
mitigate the extra costs financially risky. After that disastrous May
earnings call, in which the company outlined how it planned
to absorb some of the shock, Dixon held a town hall.
He didn't seem phased by the two billion dollar drop
in market cap, instead reassuring staff that the company had
exceeded financial expectations. According to an employee who attended and

(29:51):
asked not to be named because they weren't authorized to
speak on the matter, Wall Street may have wanted even
more growth, Dixon said, but everything was going according to plan.
This was just some short term pain. The company has
plenty of work to do within its own walls, in
some cases literally, Most Gap stores still seem trapped in

(30:12):
amber from at least a decade ago, with crowded racks
and piles of clothing amid bright white lights and washes
of blonde wood veneer. The flat Iron store in New
York City is a little more modern, with gleaming white
lacquer displays and clothes that aren't quite as clearly separated
by gender as they've been in the past. The Flat
Iron Space is also trialing features such as a denim bar,

(30:36):
but so far the company hasn't committed to any particular
improvements to its store fleet, and the ones it is
testing aren't incredibly inventive. Cautious incrementalism at an uncertain financial
moment for retailers may be justifiable, but it may also
turn off the gap curious at a crucial moment in
the company's revival, especially at still bustling high end malls,

(30:58):
where new store designs beckon shoppers from every direction, then
there are gaps other brands. Old Navy continues to be
the company's workhorse over the years, having funded any number
of boondoggles and misfires at its sister brands. The revenue
as Old Navy does put it into a class of
its own, along with Nike, says Simeon Siegel, a managing

(31:20):
director and retail analyst at BMO Capital Markets. At Banana Republic,
revenue has declined by more than a third from its
twenty fourteen peak of about three billion dollars. Weeks after
Dixon arrived in twenty twenty three, the brand launched a
line of furniture and home decor be our Home, which
he shut down the following fall. It had a lot

(31:42):
of flaws behind the scenes, and part of that flaw
was the recognition that we had an apparel business that
wasn't healthy, he says. Dixon has been running Banana Republic
for more than a year following the departure of its CEO,
who was hired for her expertise in home goods. The
company's smallest brand and a once high growth corporate Darling

(32:04):
has also stalled out. Part of the issue is that
Athleta's premium prices force it to compete directly with trendier
athleisure upstarts such as Alo Yoga and category leaders like
Lululemon Athletica, but some of the competition is coming from
in house. Old Navy's own low priced line of gym
clothes has quietly been beating its corporate sister brand at

(32:25):
its own game with products designed to satisfy similar esthetic
and performance needs. Rumors have abounded that Gap might ultimately
offload Athleta, though the company says it has no plans
to sell the brand at this time. At the Gap,
brand executives have seen turnaround signs they like sales growth
from younger shoppers, the return of customers who'd strayed, and

(32:48):
people buying things without a discount. Of course, an undeniable
element of its current good fortune is the trend cycle.
Looser baggiar jeans have lifted the performance, at least temporarily,
of a number of brands associated with earlier eras of denim,
including both Gap and Levi's. Other trends, oversized button downs

(33:08):
linen hoodies have also bolstered interest in the kinds of
clothes that have always been quintessentially Gap peak nostalgia hasn't
exactly hurt either. Gen Z has an obsession with clothes
from the late nineties and early two thousands, which has
helped fuel comebacks at a handful of Gaps contemporaries, including
Abercrombie and Coach. To capitalize on the moment, Gap has

(33:31):
enlisted the designer and streetwear collector Sean Waterspoon to curate
limited releases of the brand's decades old designs, which have
so far all sold out. If after all these years,
the Gap brand can finally execute a comeback, it could
be well positioned for a tariffed apparel landscape if prices
go up and consumers are forced to buy less, or

(33:53):
perhaps if some ultra cheap products disappear from the country's
market entirely, some shoppers will look look for better quality
options and more versatile pieces. Gap has already started signaling
to polyester wary customers that its clothes are often an upgrade,
noting in product names when its sweaters are one hundred
percent cotton, a linen blend, or cashmere. In some ways, though,

(34:16):
that means the pressure to pull this off is all
the more acute. If GAP, with its decades of iconography
and near boundless goodwill among shoppers, can't get it together
this time, when the country is already demanding jeans and
button downs and hoodies, then what's any of this for.
In that way, the greatest product of Dixon's tenure so

(34:37):
far isn't a pair of jeenes or a collab. It's
the ever more widespread belief that maybe GAP isn't dead
after all.