Bloomberg Audio Studios, podcasts, radio, news.
At the start of 2025, it looked like Gap was in the middle of a renaissance or a 'Gapance.' That's what New York Magazine's product review site, The Strategist, called it. The once cool clothing company seems like it might be in again. It dropped an ad campaign with the actress Parker Posey in the midst of her White Lotus press tour. It launched new product lines and brand collabs, which judging by the response on social media, were landing well with younger shoppers.
If I influence you to buy anything, let it be these Gap jeans. Know we've all been waiting. Let's try on everything I got from the Gap Done collab. This is like truly my Super Bowl. I just got the full inventory list for the Madapp X Gap collab. Let's go through this collection. 2025 is going to be the year of GAP.
After going through five CEOs in 20 years, the company's current CEO, Richard Dickson, was settling into the role.
I sort of grew up with Gap as the iconic American style that we all knew and loved. And I have found myself really interested in turnaround stories.
And he was feeling optimistic he could help write Gap's turnaround story.
I think that there were strong signs that the Gapance was beginning.
Bloomberg's Amanda Mull has been tracing Gap's ups and downs with her colleague, Bloomberg specialty retail reporter Lily Meyer.
And with Gap, it's always kind of been this whack-a-mole problem because they have now these four brands. And each brand has had a moment of being really successful and then a moment of really struggling. And then Trump's tariffs hit and GAP found itself in the center of a new unprecedented challenge as a global brand navigating a trade war that promised to upend supply chains and transform consumer habits.
I'm Sarah Holder and this is The Big Take from Bloomberg News. Today on the show, we explore how new trends and new tariffs have rocked the retail industry and complicated Gap's latest efforts to turn its business around.
Amanda, give me the Gap origin story. When was this iconic brand born?
It was the summer of love. But literally, it was 1969. Donald and Doris Fisher were living in San Francisco. They founded the store in like a single storefront to sell Levis and records to the sort of like cool countercultural kids that were hanging out in the city at the time. It was a time of like real experimentation in retail. So they had the single storefront. It was a hit. They started making their own clothes. It was sort of a time where a lot of American specialty retailers were trying to figure out like what a store was going to be in the decades to come. And the Fishers and Gap were front and center.
The Gap of the 70s was all about flared jeans and boldly patterned shirts. It didn't really become the Gap we know today until the 80s. That's when the company hired Mickey Drexler as CEO. He'd helped turn around Ann Taylor's business and the Fishers were hoping that he could also help Gap.
This was the early 80s. The American mall was growing at a rapid pace. There was all these new types of shopping centers opening around the country that needed stores and there was like a real opportunity as like the country casualized and work casualized. Young people were looking for like the next way to dress. So what Drexler did sort of famously was strip out a lot of the experimentation that they were doing and be like, we're just going to make really great basics and we're going to make them cool. So they sort of like married the jeans and button-down and t-shirt business to this idea of cultural relevance. They recruited a lot of celebrities and tastemakers and like sort of cultural figures like Spike Lee and Joan Didion.
Joan Didion with Banana Republic wearing the black turtlenecks.
Yes. Yes. And they hired like the best art and fashion photographers in the world, people who were shooting for Vogue to shoot Gap ads, to shoot just cool people in like straightforward clothes that a lot of people could imagine themselves wearing and, you know, sold a lot of jeans in the 80s and 90s that way.
Amanda says another stroke of '90s era Mickey Drexler genius was launching a new brand under the Gap umbrella that offered shoppers a cheaper option, Old Navy.
They saw that other companies were sort of on to them as far as like, oh, we can make jeans and t-shirts cool and we can undercut Gap on price. So, Gap as a company basically said, well, you know, we might lose some customers to lower priced lines that offer similar clothing, but we can also open a lower-priced line of similar clothing and GAP might lose the sales as far as Gap brand, but Gap the company will retain the sales. They'll just go to Old Navy.
Old Navy helped the company stay relevant even as the Gap brand faced new headwinds in the early 2000s and 2010s. That's when customers started shifting away from Gap stores and towards online retailers and fast fashion brands like Zara and H&M that could produce basics for a fraction of the price.
And then you at the same time, Gap sort of meets that moment as a retailer with like a ton of debt, a lot of leases in malls that they don't necessarily want to be in anymore. They had the makings of trouble down the road and suddenly they were down the road.
Debt, bad real estate bets, these were real problems for Gap, ones that Lily Meyer says the company tried to address through a series of corporate side quests.
In 2006, it launched an online shoe and accessory company called Piperlime, hoping it could compete with Zappos, and then shut it down less than a decade later. In 2008, it took over an athletic brand, Athleta, which the company still owns. In 2012, it acquired the trendy fashion brand, Intermix, then sold it to a private equity firm in 2021. It kind of kept stuttering again and again. All the while, their core business was still struggling as well.
The core business of Gap, Inc., GAP, the brand was getting smaller and smaller and smaller. It brings in like half the revenue of Peak Gap, which was 2003. 2003 was GAP's high revenue watermark. It made a record 7.3 billion. But by the 2020s, Peak Gap was squarely in the rearview mirror, and the company decided to bring on a fresh face to stage a comeback. Richard Dickson.
Dickson had joined GAP's board in 2022 while he was still an executive at the toy company Mattel, which makes Barbie dolls. And in the leadup to the Barbie movie premiere in 2023 with Barbie Mania in full swing, Dickson got his next opportunity. That August, he became Gap's CEO. Amanda and Lily sat down with Dickson earlier this year for several recorded interviews. He had noticed that the Gap brand website was really hard to shop on. It was really hard to find what you wanted. And so he took a group of his executives shopping as he described it to us.
We got together in the room and I was new and I said, 'Look, you know what we're going to do? We're going to go shopping.' And I pulled up the sites. And we spent the next couple of hours like basically melting down the organization to deal with truth. Do we think that we're telling really great compelling narratives around our story and merchandising and why we exist?
He also held a town hall for GAP employees where he delivered some tough love.
I acknowledge to the company that there's a positivity bias in this company. I sit in meetings and you're all telling me how great things are, but then you look at the business. You go to our stores, you go online, you hear the drumbeat in the outside world and they think very differently. So what's happening in here? The company just wasn't dealing with the truth.
