Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg Business Week with Carol Masser and tim Stenoveek on Bloomberg Radio. All right, well, let's get to it because it's the cover of the July US edition of Bloomberg Business Week. It's about the Gap CEO's battle to save the brand and the challenge that it is slammed into as a result of the President's tariffs. The iconic nineties retailer was on the precipice of death for years. Richard Dixon finally
had momentum for a comeback, then came Trump. Amanda Mole is the lead writer on the story. She joins us here in the Bloomberg Interactive Brokers Studio a great deep dive on Gap. Congratulations on the cover story. Thank you. I want to start historical here and just remind everybody what Gap was and what sort of happened when it lost its way. Like I'm asking you to give us the entire story here, but think back to the nineties.
And fall into the Gap fell into a slump, Yes it did.
But the nineties this was so I remember. I remember having my parents' friends coming and visiting us, from Europe in a small town in California, and they wanted to go to The Gap absolutely when they got to the United States, right, yeah.
Yeah, It's it's hard to explain to people who are too young to like be aware of pop culture during the eighties and nineties, but The Gap was sort of like the king of American aesthetics for for quite a while during the eighties and the nineties. It was a store that was so powerful and so so well trafficked that it commanded some of the same least terms in malls is like anchor department stores that were much much
larger it. You know, it was a company that that sort of married the sort of casualizing clothes of the era with this sort of like great fluency in pop culture. It's advertisements were these like incredible black and white portraits of you know, iconic celebrities and tastemakers, people like Spike Lee, Joan Didion, you know, by these fashion photographers who were
some of the most celebrated minds in the business. It really, you know, cast a net in culture outside of the you know, forty dollars jeans and fifteen dollars t shirts. It clothed everybody. The one hundredth anniversary issue of Vogue featured supermodels on the cover wearing Gap jeans and button downs. It was truly an incredible force in, you know, creating the idea of how Americans dressed now.
Until it wasn't until it wasn't like what brought it down too much competition, like talk walk us through.
Well, you know, over the past forty years, American retail has just changed a lot. Gap really thrived in an era when people went out to shop, when people went to malls. The rise of the Gap as a national retailer sort of sort of mirrors the rise of the suburban mall as the place that people thought about going to do their shopping for clothes as a cool place to go. And when malls started to decline, so to
Gap for many of the same reasons. Gap had grown really really large at that point, and it had a lot of leases and a lot of sort of aging shopping centers across America. And then you get the one two punch of some regulatory changes in the mid two thousands that led in a lot of international fast fashion retailers Zara, h and m things like that, And then the Internet gave people in you know, virtually everywhere in America a much wider access to different types of clothing.
So suddenly there was just a ton of cheap clothes everywhere. And the sort of gamut that the Gap ran, which was you know, cool jeans and T shirts, people had caught onto it, people imitating what they were doing. And so you combine that sort of like lease load in debt load that they had with all this new competition in these new retail channels, and they just fell off.
We're going to get to Richard Dixon and the task that he has set out in the for him and the obstacles he has ahead of him in a second. First though, Mickey Drexler a legendary name in the world of retail. What was his what was his role in where Gap is today?
Mickey like was Gap for twenty years. The Fishers, the family that found a Gap, hired him in nineteen eighty three after he had turned around and Taylor and he stayed at Gap for almost twenty years. After that. He built the company into the sort of cultural engine that
it was at its peak. He sort of understood that, like, in order to sell jeans and T shirts, you had the jeans and T shirts had to mean something, and he was great at making meaning out of sort of regular close and he was great at, you know, organizing a company that really sort of kept its fingers on the pulse of like what people were interested in, interested in what felt cool, like what might motivate people to
go out and buy something. And he for twenty years was sort of fantastically successful at that, but at the end it wasn't enough to save his job.
Yeah, And I feel like then they kind of bounced around a lot, right, I think, like trying to figure out what they need to be in this very as you say, I think you played out really like I mean, let's be clear, retail has had a really tough time for a long time, and so the dust is settling. I mean, I even think about Levi's that has gone through a revival of sorts. I just bought a pair of Levi's. I haven't bought Levi's in such a long time.
But for the gap, they went through a lot of bouncing around, and that also takes its toll.
Yes, So in between Mickey Drexler and Richard Dixon, the current CEO or four CEOs who.
Were that's over like about twenty three years.
Yes, so they lasted it was actually almost almost exactly twenty years, so that they lasted all about like four or five years of piece on average.
Just about getting settled, yeah, initiatives, and then it's like gone right.
And you know, the trouble that GAP has had with executives over the past twenty years mirrors a lot of the trouble that other sort of like Great American companies have had in that period of time looking for people to bring in to like solve one problem while then accidentally making another problem worse. So you bring in someone to deal with the debt load and deal with margin, and then they do that, but creativity sort of plummets.
Then you bring someone into to deal with like the the sort of overabundance of leases and closed stores and streamline and they do that, but then the quality of the clothes also goes down because they're streamlining the you know, the materials being used. So you are sort of playing whack a mole with all of these different problems. And when you are bringing on executives that are meant to deal with sort of like systemic issues or logistical issues
or financial issues, within a company. In a company that sells aesthetics, that sells ideas, that sells coolness, that can be really, really difficult in the long term unless you have like a sort of rare type of person and it's just hard to find that person.
And you know, it's funny as they've gone along, like I feel think about I don't know, when my daughter was young, our Gap baby and Gap and Kids, like it seemed super successful, like there are things that they've done that have done well, and then I don't know, like just I don't know whether it runs out of steam or momentum. I don't know.
Yeah, No, Gap is a fascinating company because it's got a bunch of brands within it. It's got Gap, but then Old Navy, Banana Republic, Athleta, Athleta right, and then it's a bunch of those brands have sub brands too, So like Gap has Gap Kids, Banana Republic, tried Banana Republic Home. There used to be Piperlime, which was a zappost competitor. There was Intermix, which GAT bought and then sold Told Equity. It was trying to get more into
like the higher end fashion game. Like there's been all these sort of like side quests and boondoggles and sub brands and things that just didn't work. And what has underwritten a lot of that for a long time is
Old Navy. One of Mickey Drexler's big things that he did for the company was launch Old Navy in nineteen ninety four and in that time GAP's revenue has has fallen by about half since its peak in two thousand and three ish, But Old Navy sells over eight billion dollars worth of clothes every year and has really like financed all these boon doggles.
Can I tell you so many times I'll be like, that's really great Old Navy, Like it's just and like fashion forward, even like it's pretty impressive.
So let's fast forward to today, because you've got a lot of time with Richard Dixon and some really interesting commentary about like what he did when he first got to the role in terms of taking the executive shopping, hearing about their like relentless positivity and meetings that he didn't necessarily see as realistic. What is his path forward in the face of tariffs, which you write the piece, this company's actually pretty well positioned to deal with, right, So on the face right.
A lot of what Dixon did when he got there was sort of changed the attitude of the company, I think, because it's something that's interesting always as someone who sits like outside of these companies and is trying to figure out what's going on that Like when you have a company that's been like sort of beleaguered for a long time, it's I always wonder, like, what do they think about what everybody says about them externally? And something that Dixon told us about Lily Meyer was my co reporter on
the piece. She he was like, you know, he had this town hall when he first got there where he you know, had a a slide presentation put together of all the negative headlines about the company and got up in front of the company and was like, everybody knows what we should be doing except us, and it's hard
to say that they're wrong. It was sort of like, you know, this like huge legacy company had become like a little bit moribund, a little bit complacent, and sort of figuring out a way out of that psychologically, I think has been a big part of his tenure so far.
And when you combine that with the sort of like long un sexy work that has been going on, you know, under him, but also before him, of cleaning up the company's debt, of cleaning up the discounting situation, because a big issue for Gap has been that they've trained their customers to expect everything to be fifty percent off all the time. And it's really hard to grow a business.
So true, it's so true, like you get used to it and then no, no, and then exactly you know it and you know it's coming. I thought you were going to say the barrel gene saved the company.
Well, they I think are indicative of something that might save the company. I would say, which is the capacity now for Gap? Because it's cleaned up its logistics, it's cleans up its supply chain a little bit to see a trend coming, to have a product ready to go and have the technological and data capability to like put it into stores like at the right moment in order to like sell a bunch of it and not have to discount it and not have to send it to outlet and not have to you know.
Doesn't end up at tjmax.
Sorry, yeah, so far, not for these so far, not for these genes. And it's it's interesting because it's a barrel. Genes are sort of these like like curved outward like sort of cartoon cowboy leg jeans that are a little bit silly and like very trendy and very young, and it's the type of thing that for twenty years, GAP has not been able to do because they either bet on the wrong thing or it's too earlier, it's too late.
But the success that they've had with these genes, which aren't cheap and they don't discount all of the popular colors regularly, is indicative that they figured out the data and logistics capabilities to be able to like compete in this realm, which is big for them.
I think, yeah, I mean, but it's certainly fashion forward. I've tried them on. They're just not quite for me. I don't know. Have you tried them on?
I don't even know what you're talking about.
Have you tried them on?
I bought a parawise the story did. Yeah, if you get him in the right the right like weight of Denham, they like they look more slouchy than Curby went on.
Okay, because otherwise you feel like you're like, okay, corral.
Yes, it's a little it's a little cartoon cowboy.
Amnimal, you are amazing. She is seen a reporter for Bloomberg business Week. Her story it is the cover story of the upcoming new issue of Bloomberg Business Week about GAP CEO's battle to save the brand, slamming into Trump's terrors, because yeah, that is certainly an aspect of this story as well, in a big way,