What Gap needs to do to save the brand

Yahoo Finance Live’s Brian Sozzi provides his take on whether or not Gap will be able to recover this holiday season.

Video Transcript

JULIE HYMAN: It has been a tough year for Brian Sozzi's favorite retail brands, like Gap.

BRIAN SOZZI: Not my favorite.

JULIE HYMAN: And Gap shares are down nearly 2% this year. And just last week, the company painted a cloudy picture for the holiday season. I think someone is teasing you a little bit, Sozz.

BRIAN SOZZI: Yeah, this is not one of my favorite brands. I want to make that perfectly clear. I mean, following this company has been just-- it's just abysmal the past decade. But nonetheless, I caught up yesterday for our Rocking Retail special. We spent the whole-- about an hour, over an hour over at Oculus in New York City. And we caught up with Mickey Drexler. He's the former, I would say iconic, the iconic CEO of Gap that put that company on the map. So I asked him what he thinks about Gap right now. It's a company in turmoil, closing hundreds of stores, also looking for a permanent CEO.

MICKEY DREXLER: They should look like Gap looks. I think it's a great opportunity to be the all-American uniform-ish with very fair prices and with good-looking clothes, lots of color. But everyone needs to look good. And, you know, I think they'll do much better.

BRIAN SOZZI: So I'll pick up the baton where my buddy Mickey left off. He knows a lot of people at Gap. He was a little hesitant, I think, comment on some changes they need to be made there to save themselves. So I'll do it for him. Here are my suggestions because I have no friends at Gap.

First up, I think they need to close 50% of their US Gap stores. There's, I believe, over 500 Gap stores in North America. You got to slice that in half, get those costs right. This brand, at this point its life cycle, should only be in the top malls in the country and the top offsite or locations that you could find in local neighborhoods or outside of the mall.

Next up, exit most international locations. We've seen Abercrombie close a lot of flagship stores overseas. We saw Target, a couple of many years ago, exit Canada. Gap has no idea what it's doing overseas. Close those stores, get your costs right, reinvest in the US business, like we've seen the likes of Lowe's, which recently sold off its Canadian business.

Just focus on the US for Gap. Sell Athleta. That is a thing, or that is a view that has long been held on the Street. This is a brand that probably Gap has mismanaged in five-- over the past five years. Sell that brand. Again, focus on that Gap and Old Navy division.

Next here, hire Abercrombie & Fitch's CEO Fran Horowitz. I think she has done an awesome job resetting the culture at Abercrombie, resetting what the clothes look like at Hollister and Abercrombie & Fitch. I think she should get a call from Gap, which is a bigger brand at Abercrombie & Fitch. And if anybody is going to turn that company around, I think it's her.

And last but not least, fix the damn sizes. You go-- I went to Banana Republic over the weekend. I left with the medium. And it still fits like a large. That is just not how these clothes are supposed to fit. And the same deal, the same vibe is over at Gap. Even Old Navy, the sizing has always been awful for men's and women's. I encourage them to finally get these things right so they fit true to size.

My take is this. I used to like me a good Gap little sweater. Right, there I am right now, in a turtleneck, which I don't wear turtlenecks anymore, but my former Gaps off in college, I always used to wear turtlenecks. That was my thing, and I probably had that sweater.

JULIE HYMAN: What changed?

BRIAN SOZZI: They're just too warm. Just too warm. Yeah.

BRAD SMITH: Could you bring back the turtleneck for tomorrow?

BRIAN SOZZI: I can't do it, but I heard you guys are going to do it.

JULIE HYMAN: We are. We'll be the turtleneck twins tomorrow. You'll be the odd man out.

BRIAN SOZZI: It's too warm. I just emit too much just, like, energy. I can't sweat. I don't want to get hot, guys. It's gonna be hot.

BRAD SMITH: The sizing is off because they know that you're going to the gym for five hours every Saturday.

BRIAN SOZZI: The sizing is awful. Just do better. Give me clothes that fit.

JULIE HYMAN: Well, their sizing has always been like that.

BRIAN SOZZI: Why can't they fix it? Nobody else has this problem. Just make better stuff, man.