By Granth Vanaik
(Reuters) -Gap has named Mattel (NASDAQ:MAT)'s chief operating officer, Richard Dickson, as its top boss after a year-long search, betting on the executive's success in turning around the Barbie brand to revive the struggling apparel maker.
The company's shares rose as much as 9% in morning trade on Wednesday, with some analysts calling the appointment as a "step in the right direction". Mattel's stock slipped 1%.
Dickson, who joined Mattel over two decades ago, revived the Barbie brand by adding more diverse fashion dolls and in his current role was also responsible for franchise management.
"His (Dickson's) prior experience in re-invigorating multiple brands could prove valuable when creating and implementing his playbook to drive improvements across the business," Jefferies analyst Corey Tarlowe said.
Gap has wrestled with weak demand for its casual attire as customers pulled back on discretionary spending while its stock has lost about three-fourths of its value since hitting a 2021 high of $37.63.
Insider Sonia Syngal stepped down as the company's CEO last July after a tenure marked by fashion missteps at the Old Navy brand, supply chain snarls and decades-high inflation that derailed a potential sales recovery following the pandemic.
Over the past year, Gap has also grappled with elevated inventory levels and has reduced its workforce to ease cost pressures.
The mounting troubles also led some Wall Street analysts to highlight the possibility of the company having to sell one or more of its brands. Gap previously shelved plans to spin off Old Navy, citing higher costs and the complexity involved.
"The new CEO needs to focus on how to help figure out what the Gap brand represents and how to maintain the brand equity," said BMO Capital Markets analyst Simeon Siegel.
Dickson, who has been on the Banana Republic-owner's board since November 2022, is leaving when Mattel is riding high following the blockbuster success of the "Barbie" movie.
He will take charge later next month, Gap said.
Dickson has also spent more than a decade in various roles at Macy's-owned Bloomingdale's before co-founding Gloss.com, the first online retailer dedicated to high-end cosmetics.
Gloss.com was later acquired by Estee Lauder (NYSE:EL) in 2000.
Mattel is scheduled to report second-quarter earnings later on Wednesday.