There was a time when Gap (NYSE:GPS) was the definition of cool. The company's mid-'90s Matrix-style khaki ads were so cutting-edge it almost hurt, and when the bad guy in the 1996 flick A Very Brady Sequel saw the Brady kids' bell bottoms, he knew how to move them into the '90s: "Here's $20. Now get to the Gap, fast!"

How times have changed.

These days, Gap is on a multiyear slide toward irrelevance, with shrinking sales, margins, and influence over everyday fashion. Paul Pressler was brought in to work the magic he developed at the Disney Store when Disney (NYSE:DIS) actually owned it, a decade earlier. Now he's leaving Gap -- mission incomplete, tail between his legs.

Gap has become the apparel-retailing equivalent of also-ran companies such as Pier 1 (NYSE:PIR) or Movie Gallery (NASDAQ:MOVI). Something is deeply wrong, and there's no quick fix available. So let's do Gap shareholders a favor and end the pain. The company is already "exploring strategic alternatives," which is corporate-speak for "looking for buyers." It's the right thing to do and the right time to do it, assuming that the buyer does take the retailer private for a while.

It's a perfect target for a leveraged buyout, in which the presumptive buyer finances the acquisition with loans secured against Gap's assets and then repays some or most of those loans with the newly acquired cash and property. The chain has plenty of real estate on its balance sheet, along with lots of expensive store leases. Without shareholder pressure to produce earnings in the short term, or to take the company in any particular direction, a private Gap could do a few things that a public company really can't.

The Old Navy segment has problems. It's not performing, doesn't fit well with the Gap and Banana Republic mid-scale to upscale brands, and occupies vast, expensive expanses of in-mall real estate. Either shut this division down or hand it off to someone else -- perhaps right back to the open market. Pocket the sale price of the stock, the company, or the real estate value of the closed stores, and put the capital to work for the main brand.

I'm not a fashion guru, and I wouldn't presume to know how to fix the main product line. So spend some of that cash to hire someone who does have a clue. In apparel retailing, more than in any other business sector I can think of, the visionary is king. See whether you can lure top talent away from a proven performer such as Guess? (NYSE:GES) or Charlotte Russe (NASDAQ:CHIC). Then surround the new leader with the people and tools he or she needs, whatever the cost, and give the whole project some time.

There are no guarantees in this world, but chances are good that Gap could come out of that transformation at the top of the game again -- in a few years. Keep the process under wraps, out of the public eye, and take it back on the market when it's good and ready. Or perhaps not at all -- Levi Strauss might want some company in the private-retailer world.

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Fool contributor Anders Bylund is a Disney shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always chic.