Gap stock experienced a significant surge on Monday following the announcement of the appointment of Chris Blakeslee as the new president and CEO of Athleta, the company’s athleisure brand. The move aims to revitalize sales for the apparel giant.
Blakeslee, previously the president of sister companies Alo Yoga and Bella+Canvas, will assume his new role on August 7. Under his leadership since 2017, Alo Yoga achieved exceptional growth, with sales surpassing $1 billion in 2022 and nearly doubling year-over-year growth. This tech-centered athleticwear company has gained popularity significantly among celebrities, influencers, A-listers, and is rapidly capturing the attention of young consumers.
According to Bob Martin, Gap’s executive chairman and interim CEO, Blakeslee is renowned for delivering impressive results in high-growth businesses by blending creativity with operational rigor.
Investors responded positively to the news, driving Gap stock up by 4% to $9.50 per share. Market participants are optimistic that Blakeslee’s successful track record at Alo Yoga will translate into improved performance for Athleta. Meanwhile, the S&P 500 showed a modest 0.5% increase in midday trading.
Athleta’s Struggles in a Competitive Market
Once considered a shining star in Gap’s collection of brands, Athleta is facing tough competition in an industry where newcomers like Alo Yoga are rapidly gaining market share. Additionally, consumer preferences have shifted since the brand’s peak during the pandemic. People are now spending less on athleisure and more on professional and occasion-specific attire.
In the first quarter of this year, Athleta experienced a significant decline in same-store sales, with a 13% decrease compared to the previous year. This downward trend has been consistent, leading to former CEO Mary Beth Laughton stepping down in March. The negative or flat same-store sales results over several quarters prompted this change in leadership.
Recognizing the untapped potential of Athleta, Gap’s CEO, Martin, expressed his belief in the brand and its need for a new leader who can navigate the competitive market and position Athleta for long-term success.
Gap itself is in the midst of a broader reorganization plan focused on streamlining its operations and reducing costs. Since September of last year, the company has already announced two rounds of job cuts. The goal is to achieve $300 million in annualized savings through this restructuring plan, with half of the savings expected to be realized by 2023.
In summary, Athleta’s struggle to maintain its standing in the market highlights the need for strategic changes. While Gap works towards reorganizing its operations and cutting costs, it also recognizes the importance of finding the right leader to steer Athleta towards future success.
