No shortage of retail CEOs here at the World Economic Forum in Davos, Switzerland. We have a first-time Davos guest, that's Gap's Richard Dickson. Rich, I've seen you all over the world: New York Stock Exchange, and now Davos. So what have you learned here on the ground?
Well, first of all, it's a spectacular place to be. It's not bad at all. Being on the world stage of cultural conversation has been a really important place to be as a curious leader, as well as obviously leading a company of our size. So it's a special place and a special time in our company to be here.
I know you're over a year into the top job, done a lot of great work there. But how does Gap fit into the international scene? You've been U.S.-focused. What is the presence of this company and where do you stand on this grand global stage?
Yeah, well, first off, we have certainly more than just the Gap brand. Gap Inc. has Old Navy, which is our largest brand, well known throughout the world; Gap, of course; Athleta; and Banana Republic. These are storied brands, decades young, with international presence: Europe, Latin America, Japan is a very big market for us, Asia. These are globally recognized brands and diverse in their footprint in the context of what they represent in each region. But ultimately, a strong international presence but a North American-based business.
I found an old clip of myself, Richard, when I was an analyst from 2012, and I said Gap was dead. And I thought to myself today, I look like a real ass. I mean, it was right for a certain period of time, but not under your leadership. Is the company officially saved? Is Gap back so we can stop thinking about the struggles of Gap from yesteryear?
Well, first off, I think we're all Gap fans. And I think that's what's most exciting: these are brands that people connect to, and they've connected through peaks and pits and various different moments in time where we were less relevant. The company, I believe overall, through that has been incredibly resilient. So this is a group of assets that, as we continue to drive our strategic priorities, putting more discipline into financial and operational rigor, we've stabilized the top line, we've expanded the margin component of our P&L pretty significantly, we've controlled inventory, we've done less promotions, we've controlled the SG&A, and now our operating margins are really getting back to some historical references.
Thanks for taking my sales away online.
Well, look, there's still great offers, it's just less of them. And that also is part of our strategy. So the brand now can move, and has been moving, into reinvigoration. And that's really the playbook that we're putting into place: what is our reason for being, as a purpose inspired by our consumer insights and trends, creating great product at great value, editing and telling better storytelling processes out of our merchandising and merchandising mix, and then executing with excellence. I mean, Brian, you know retail is detail. We've got a lot of retail stores, and so executional excellence is a really core component of our strategic point of view.
Do you still need all these stores?
We're evaluating our retail footprint. We continue to always evaluate our retail footprint. There's probably more doors to shut and there's more doors to open. So absolutely, over time, we believe that there's going to be a moment where we're going to be ready for new pipeline growth. We have tests in each one of our fleets right now on new concepts. We're testing them, we're experiencing the consumer's reaction to them, as well as the edit in our product assortment. We're feeling very confident, but it's a continuous improvement model. We've got to continue to do what we say we're going to do, stick to our strategic priorities, continue to meet the metrics that we have been and more. And then in the mid to long term, we're very excited about our future.
I would say last year you started to work your marketing mastery. And to me, you may disagree, that was the first wave of change that I saw from the company from the outside looking in. But then the apparel started to change at Gap and Old Navy. What is this year like? What changes should investors expect? How is it all going to look different? What trends are you leaning into, not just with Gap but also Old Navy and even Athleta?
Yeah, look, turnarounds like this, or transformations, take time. There's also a sequential order to it: there's a short, there's a mid, and there's a long-term proposition. We are still in the short term of fixing the fundamentals. Still, yes. Still. But while we're fixing the fundamentals, we're performing while we transform.
What were these prior teams doing for 10 years, Richard? They were doing what they were doing with passion and pride.
