Gap has named a new CEO, from toy giant Mattel, nearly a year after its previous leader departed.

The retailer announced Wednesday that Richard Dickson, currently Mattel's president and chief operating officer, will assume the position. He's been with the toymaker for a collective 20 years, most recently from 2014 until now, where he helped revitalize the Barbie brand. He also had a previous stint at Jones New York, where he ran a number of its brands like Nine West for a decade before rejoining Mattel.

In a release, Dickson said that Gap is a "portfolio of iconic brands, known for having defined American style with bold thinking and making quality fashion accessible to millions. But it's the work ahead that excites me most, the chance to work hand-in-hand with the teams to evolve Gap for a new era."

Dickson begins at the Gap on August 22.

Mattel, which reports earnings after the bell, is having a blockbuster week thanks to the success of the "Barbie" movie (distributed by Warner Bros., like CNN, a unit of Warner Bros. Discovery). It grossed a stunning $155 million domestically over the weekend, giving the film the largest opening weekend of 2023 and the biggest-ever debut for a female director.

Shares of Gap jumped more than 7% in early trading. However, it's down about 10% for the year.

Neil Saunders, managing director of GlobalData, said in a note that Dickson is a "very solid appointment who brings an outside perspective and extensive skills in brand marketing and innovation."

"His reinvention of the Barbie franchise, which is currently riding on a high, is also proof that he understands how to turn around established brands that have run out of energy and steam," he said. "This is exactly the challenge he will need to address at Gap."

Earlier this week, Gap announced Chris Blakeslee as CEO for Athleta, its athleisure apparel brand. He most recently led Alo Yoga, the trendy upstart that Gap has been trying to compete with for the female-focused unit.

Gap's decline

Gap, once the symbol of cool, has been struggling for years. Sales at the brand have slumped, and it has become an afterthought for many American shoppers as they shifted their dollars to rivals, like H&M, Zara and even Target.

The 54-year-old brand rode the expansion of suburban malls in the 1980s and 1990s, becoming one of the largest mall stores in the US. So its fortunes have largely been tied to those of malls — great news in the '90s but not so much now. Malls have been rapidly losing customers to online shopping and big-box stores.

The decline is forcing the retailer to close 30% of its Gap and Banana Republic stores in North America by next year.

Gap has tried several strategies to revitalize its flagship brand, including a partnership with Kanye West for a line of Yeezy-branded clothing. But the partnership was a bust when the artist announced in September 2022 he was ending the partnership for "substantial noncompliance" after just two years. A month later, Gap pulled the merchandise after West made antisemitic comments.

Notably, Gap and Mattel struck an apparel partnership earlier this year. Included in that was Barbie-branded clothing.

Challenges for the new CEO

Dickson is replacing Sonia Syngal, who was with the company for just two years. But the failure to reverse Gap's fortunes can be traced several decades.

Mickey Drexler was the person who built Gap into a powerhouse during the 1990s. First the president of the Gap division and later CEO of the company beginning in 1995, Drexler pushed Gap to expand beyond jeans into khakis and oversaw the creation of the budget-chain Old Navy in 1994.

But it was also during Drexler's tenure that Gap lost its connection to its core customers. It suffered 24 straight quarters of same-store sales declines toward the end of his reign, and he stepped down in 2002. It doesn't help that Old Navy and Banana Republic are also struggling, adding to Dickson's challenges.

The company then rotated through several CEOs, including former Disney executive Paul Pressler, drugstore executive Glenn Murphy and Gap veteran Art Peck. Syngal took over from Peck in 2020.

"The core Gap brand is in desperate need of reinvention, the deep-seated problems at Old Navy need to be addressed, the faltering recovery at Banana Republic needs to be put back on track, and the now fading momentum at Athleta needs to be reinvigorated. In short, being CEO of Gap is not for the faint of heart," Saunders said.