The companies are Gap and Barnes & Noble. Both have recently hired CEOs tasked with turning the businesses around.
Gap’s recently reported Q3 2023 earnings results surprised Wall Street analysts and the stock jumped 15% in after-hours trading. As the Wall Street Journal reports:
Gap reported that comparable sales fell 2% in its quarter ended Oct. 28. That was much better than the 7.4% decline that Wall Street analysts polled by Visible Alpha had expected. Net income of $218 million was more than three times the number analysts had penciled in.
Richard Dickson, a former Mattel executive took on the job of leading Gap 3 months ago. One of his first priorities was to take a new strategic approach at Old Navy.
Old Navy launched a women’s marketing campaign last quarter that featured on-trend products and improved its online presentation. That strategy worked: Old Navy saw comparable-store sales increase 1% over last year compared with analysts’ expectations for a 7.6% drop. That follows eight straight quarters of comparable-store sales declines following merchandising mishaps around inclusive sizing.
His next focus will likely be on simplifying and focusing the retail strategy at Athleta and Banana Republic.
Recovery has been uneven across brands, with Athleta reporting a comparable-store sales plunge of 19% on year, sharply lagging behind expectations. The athleisure brand probably pushed into too many categories, according to a recent report from Evercore analyst Michael Binetti. Banana Republic also is far from recovery, with comparable-store sales down 8%. Dickson stressed on the call that each of the brands needed clearer messaging through better marketing and presentation.
Barnes & Noble
James Daunt, a respected independent bookseller in London, took the job of leading Barnes & Noble in 2019.
The chain of bookstores is going through a transformation. As the Wall Street Journal reports:
The Barnes & Noble on the Upper West Side of Manhattan has been the site of a grand experiment for much of the past year. The chain invested millions of dollars to rebuild this Barnes & Noble into a model for its other stores to emulate as the company transforms into a bookseller for the modern age.
Daunt has a distinct and clear vision:
Combine the power of a big chain with the pleasure of a beloved indie. He wants Barnes & Noble locations to feel welcoming but not overwhelming—a chain store should be more inviting and less intimidating than a truly independent shop
One of his first major changes is to empower each local store manager:
By shifting control of the process to individual store managers across the country, Daunt is giving local booksellers permission to do things they were never able to do before. They have discretion over purchasing, placement and even pricing.
Another major change was to improve the “flow” of the bookstore from the perspective of the customer:
Byrnes and his team made it a priority to improve the flow. They reconfigured the map based on customer feedback. On the upstairs level, where toddlers run around and teens flirt after school, they moved entire sections around.
How do you know if the changes are working? In addition to standard Retail metrics such as store revenue and operating costs, the team is also assessing the return rate:
One way to measure the health of a bookstore is the return rate—the percentage of unsold books that retailers ship back to publishers. The lower, the better.