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Plunge | Fortune

Plunge Company Profile, Stock Price, News, Rankings | Fortune

Once a $43 billion giant opening two stores a day, Gap stagnated for two decades, losing its cultural grip while its market value plunged roughly 90%. In 2023, the company tapped former Mattel executive Richard Dickson, architect of Barbie’s revival, to turn the brand around. Early bets paid off: a viral campaign featuring pop group Katseye dominated TikTok, helping spark one of Gap's strongest quarters in 20 years. Now, the retailer faces a tougher test: converting fleeting cultural momentum into durable growth while lifting a four-brand portfolio.

Inside Gap's Comeback: Turning Cultural Relevance Into Revenue

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321. In the 90s, Gap ruled American retail, opening a store nearly every day. Everybody loves Gap. They just wondered what happened. Then fast fashion beat it on speed and over discounting cut its margins. Its market value fell more than 90%. By 2020, dwindling demand led Gap to warn it could run out of cash. The Gap fell into the classic trap of getting too big for their own good. So Gap bet on the CEO who revived Barbie. You'd come into our stores and we were more about price than product. It was about stuff, not story. His strategy pairing Gen Z celebrity, nostalgic music, 567, let's go la la la la and. Dance designed to go viral. 30 dancers, all different dance styles. 8 billion impressions later, Gap Brands grew 10%, becoming the portfolio's fastest growth machine, while the other three brands lagged behind. So can cultural relevance revive a legacy brand? Originally built to bridge the generation gap, Gap has always fused culture with commerce. Any other line but the gap is childish. We took khakis and made it a cultural conversation. That type of heritage is one that gets very inspiring for people to think. What can we do with that as a canvas for cultural conversation moving forward? In 1999, Gap's market cap hit its $43 billion peak, more than Nike and Amazon combined at the time. By 2020, Gap had lost more than 90% of its market value. So how did Gap fall into a long decline in the first place? The Gap fell into the classic trap of getting too big for their own good. The Gap tried to be everything to everyone. When you do that, you become very little to anyone. Outpaced by fast fashion, Gap fell into a cycle. Too many stores, excess inventory, and over-discounting that taught customers to wait for the sale. The Gap brand lost nearly half of its sales and closed more than 60% of its stores globally. We weaned ourselves off of the over-promoted, over-signed, uh, offerings. It doesn't mean that we're not a value-oriented brand at all. In fact, we love our distinction as a value-oriented brand, great prices, great style. And great quality. After cycling through four CEOs in four years, Gap hired Richard Dixon. He helped revive Mattel's Barbie to a record $1.7 billion cultural phenomenon. Part of the challenge when we started this reinvigoration, you'd come into our stores and we were more about price than product. It was about stuff, not story. And so we took these and said, OK, let's edit the stuff into a story and let's start to tell our product story in a way that is primary. On set with that. Read and camera. Well, here you have it. Yeah, and this is a great detail. It is the Hailey Jean. It's inspired by the year that she was born in '96. It's created enormous amounts of excitement and ultimately obviously featured here prominently in the center of the store. To fix the company, Dixon cut inventory, closed stores, slashed discounts, and bet on cultural relevance to drive foot traffic. These are decades old, but yet they seem so culturally. and timeless. And then you can look at the Hailey Bieber shot and think we can put her into this mix, and it is completely part of the now archival history. It's consistent and we've brought back that discipline to really own Gap style and to really celebrate it. Down, up, down, up, and we're going to make this work. It's just been an uncontrollable passion. He launched the fashion tamement strategy in 202. With Tyla and scaled it with Troy Savan, but global pop group Catsy's Better in Denim was where the hype paid off. 400 million views in 3 days and sales went up 7% that fall, up sharply from the preceding quarter. Why the focus on cultural relevance from the get-go? Brands are stories, and to some extent those stories have to be relevant and connect with an audience. And in the context of our history across our portfolio, we started and had great storytelling brands, but somewhere along the way lost the story and became more about the stuff and the stuff while it sold in the context of turning on sales we we lost the connection of the storytelling of our brands and so cultural connection and cultural relevance is actually a fundamental part of brand management. What is the purpose of cultural relevance? In theory, it should be to drive revenues. It may also drive pricing power. We're on this precipice of finding out are these idiosyncratic actions that are getting us to think about Gap as being cooler actually gonna drive an ongoing improvement in revenues, or did the Gap see the same tariff-induced lift to pricing? That everyone else saw across the world. Let's talk about storytelling. How is that different now as you try to reach Gen Z? I think the platforms that we have to create assets for are very unique and different. Clearly we're in a digital dialogue with our consumer. Attention span is very short, and so you have to be incredibly impactful and effective. Before Dixon, the path to reclaiming relevance. was littered with expensive misses. The company spent more than a billion dollars on advertising, trying to buy back its cool with little to show for it. The misfires piled up, a new logo dead within a week, a flopped dress normal campaign, and a high stakes deal with Kanye West that collapsed, resulting in a $53 million write-off. So Gap cut ad spending by over $250 million betting big on music videos. with Gen Z creators. My name is Yong Niko. I'm Indian Aetti. My name is Bobby Ferreira. Celebrity collaborations are nothing new and they're not unique to The Gap. Why is it that some of them catch on and others do not? That's the same question. How do certain products catch on? How do they not? It needs to be relevant at the right time with the right product. And so you need all three. You need product, storytelling, and distribution, and luck, and luck, Definitely luck. Our efforts in our campaigns and our storytelling is resonating, is driving cultural conversation, is driving trend. 3 years ago, we never would have sat here and said Gap is going to be a trending brand on TikTok. And yet here we are, you know, trending on TikTok, driving incredible impressions and cultural conversations, and the business of the business is starting to reflect that. Now, Gap is hoping that these viral videos will convert passive scrollers into paying customers, driving foot traffic, specifically Gen Z shoppers. So you've had a lot of success in your social campaigns, but how does that translate on the ground in stores like this? What are you seeing? We see customers coming in in droves, Gen Z consumers coming in groups, having fun, engaging in the product, trying it on, having conversations, taking pictures of themselves, posting it. We created an event, and to the extent that we've driven this interest and traffic, when they get to the store, we've got to deliver that experience that they expect. Dixon also hired designer Zac Posen as the first creative lead across all four brands, bringing red carpet couture in-house. While walking in the Gap flagship, I noticed the absence of discount signs. So I asked Gap Brand CEO Mark Breitbart, how they got customers to pay full price more often. Moving from a cycle where we were in tougher business and the voice of discount in the brand just felt over, overpowering to now being in the strong part of the cycle where we have great product stories, I feel the power of our storytelling is driving the business versus Any discounting driving the business. Across the portfolio, store sales are up and comp sales have been growing for more than 2 years. Relevance is translating directly to the bottom line, but it's not a straight line. It's not straight math. You have to trust the creative process. And if we are believing in our creative teams and we're continuing to drive the amount of creative output we are in the brand and have confidence in our products and the way we're telling the story and executing, then The P&L takes care of itself. Yet for Gap Inc. to complete a true turnaround, the real stakes lie in its biggest brand, Old Navy. While cultural buzz is lifting the gap, Old Navy ultimately determines the financial bottom line. This is the biggest, quietest, but perhaps most important part of the business, not the most culturally loud, but this is the part of the business that can keep the underlying aflow, can keep growing, can drive the cash needed to affect all these turns. The question hanging over Old Navy, however, is more complex. For a brand targeting lower income shoppers, can the Gap playbook be applied in the same way? If you want to be really big, you can't be really special. Because the amount of people that are needed to buy $8 billion is just so much broader than being able to retain a certain identity and so what they need to be is can they become this huge and special business or do they just stay more of a mass player. We've got a lot of work to do to continue to put these brands in the center of the cultural conversation. Retail is detail. There's always something going wrong. Obviously we want more things to go right than wrong. It's a challenge, but it's an optimistic period where we feel like we're making a lot of progress and lots of opportunity ahead.

The Delta variant appears to be scaring off investors.


As COVID cases rise, the markets are crashing

Finance

As COVID cases rise, the markets are crashing



Delivroo's first day as a publicly traded company didn't go as planned

Delivroo's rough first day of trading

Mhm. Mhm. Mm. Mhm. Yeah, Yeah. Mhm. Mhm. Mhm. Yeah.

GoPro's stock got a haircut after it was revealed that Apple filed a patent for a remote controlled camera. Robert, was the cut justified? Absolutely. It shoulda been a buzz cut. [ LAUGH ] Look, ever since that company IPO'ed, it's been on a tear. Its share prices were trading at almost $ 100 at one point. That's complete madness. [ LAUGH ] This is a camera company. Cameras are a commodity, it's consumer electronic. Look, I've got one right here. Samsung makes products like these. Sure. Sony makes products like these. Panasonic does. Camera comes included in every one of your smartphones that you carry around. This is a very, very competitive market. Yeah, and, and, look. I'd be concerned about that. Go, goPro made it very clear, when they, filed for their IPO. Way back this summer. Speaker: In the filing, it said, this is a highly competitive market. Speaker: Mm- hm. Speaker; Our competitors are large. They have a lot of resources. They're probably gonna use them to crush us. And that's why GoPro, right there, before they ever went public, made it clear, we're gonna move in another direction. Look, GoPro knows their audience better than anyone, and they wanna become a media company. Why not use those, those customers to do that? I'll give them that, they certainly know their audience. But, to become a media company, you know, it's a delightful ambition, but Red Bull completely dominates that market right now for action sports. And it's gonna take more than hopes and dreams for Go Pro to arrest control of it from them. Yeah, but Red Bull makes energy drinks. They're not a media company. Look, Go Pro wants to become a media company because they control the distribution. There cameras are in pockets. They have that large audience already assembled, put' em together you've got a great potion. Bottom line is the company has been over- valued, its stock price's been highly volatile and this is just representing a market correction. Fair enough. For one show that's always in focus, come to Fortune. com for more tech debate.

Andrew Nusca and Robert Hackett discuss the plunge in Go Pro's stock after Apple announces it's patent for remote control cameras.

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