Gap CEO Richard Dickson discusses the brand's heavy discount strategy and how it may not be what customers think.

• Richard Dickson, CEO of Gap, was previously the CEO of Mattel and joined Gap in August after a year-long search for a new CEO.
• Dickson stated that the apparel company's products were overshadowed by the emphasis on discounts in their online communication.
• Over the summer, the "Barbie" movie was a success, and he is known for revitalizing Mattel's Barbie brand.

Richard Dickson, the new CEO, has shared his experience of joining the struggling company from the toy business in August.

On Wednesday, he stated that the firm's four apparel brands relied heavily on promotions and discounts, as customers were barely aware of what they were actually purchasing.

At The Business of Fashion's conference in Oxfordshire, U.K., Dickson spoke to an audience while a screenshot of Gap's website with money-off messages prominently displayed behind him. Dickson stated that this was typical of the company's brands a few months ago.

Dickson stated that the clarity of the conversation with consumers could be improved by making some edits. Although our product is excellent, it is getting lost in the message.

Gap's third-quarter earnings surpassed analysts' expectations, but its holiday sales forecast was lackluster. Despite this, revenue at its flagship Gap brand decreased by 15% year-over-year, and same-store sales slid by 1%. Excluding the sale of Gap's China business and the shutdown of Yeezy Gap, sales fell by 6%. Despite this, shares have increased by about 78% in the year to date.

Dickson, who had been president and chief operating officer at Mattel for almost 10 years, became CEO of Gap after reviving the company's Barbie brand, whose sales had been declining at the time he joined in 2014.

Dickson stated that the doll did not reflect what was culturally relevant, and moms turned away from loving Barbie to feeling put off by it. However, the company introduced different body types and ethnicities for Barbie, which helped with the turnaround. The "Barbie" movie became the highest-grossing U.S. release of 2023 in August, making $575.4 million in North America and $1.35 billion globally.

Dickson stated that when he left Mattel for Gap, people thought he was crazy. However, he believed that he had a blockbuster movie, a great team, and was going to a company in transformation. To him, not taking the opportunity would have been insane.

The Gap company comprises four brands: Athleta, Old Navy, Banana Republic, and its namesake banner. To differentiate these brands, every detail, including copy, font, and typography, must be communicated with precision. As a result, the evolution of this journey will be evident in each brand.

Dickson discussed the history of Gap, which began as a San Francisco store selling Levi's, records, and tapes in 1969. The founders, Donald and Doris Fisher, originally planned to name the store "The Generation Gap" to attract customers of different age groups. However, Doris Fisher changed her mind and the store was eventually named "The Gap."

Dickson advised Gap to "revisit this narrative" and "determine: What constitutes the 'cultural dialogue' currently?"

Dickson stated that Gap's advertising campaign for jeans, featuring a woman trying on various denim styles, using "The jeans. The jeans. The jeans" as a tagline, is a "hint" of where their ads may be heading.

"Encouraging our community to take risks and fail fast is a great example of how creativity can be unlocked and return to the origin story of denim," he stated.

- CNBC’s Gabrielle Fonrouge contributed to this report.