Gap Inc. announced a leadership change at Old Navy, naming Michael Francis as the brand’s new chief executive officer, effective November 2. Francis, who joined Old Navy as chief customer officer in May, will replace Haio Barbeito, who has led the division since 2022 and will transition to an advisory role. The retailer is making this move as Old Navy grapples with declining sales and customer traffic.
Old Navy reported net sales of $2.1 billion in the fiscal second quarter, representing a 4% decrease year over year, with comparable sales also down 4%. This marked the brand’s first negative same-store sales performance since the second quarter of 2023. Wall Street analysts had anticipated a 2.4% decline. Old Navy accounts for nearly 60% of Gap’s total revenue. The company attributed part of the downturn to an unexpected traffic slowdown and execution issues with summer marketing campaigns that lacked clear product messaging. However, management indicated early signs of improvement in recent weeks.
Gap’s overall fiscal second-quarter results were mixed. The company beat earnings per share expectations but fell short on revenue projections. Comparable sales across Gap Inc. declined 1%, with in-store sales dropping 3% year over year. The namesake Gap banner performed strongest with comparable sales up 10% and net sales climbing 9% to $844 million. Banana Republic posted comparable sales growth of 3%, while Athleta experienced a 12% decline in comparable sales.
Gap shares rose 12% in extended trading following the announcement. For the full fiscal year, the company narrowed its net sales growth guidance to between 1% and 1.5%, down from the previous 1% to 2% range, but raised adjusted earnings per share expectations to between $2.35 and $2.45 from the prior $2.30 to $2.40 range. The company attributed the revised guidance primarily to Old Navy’s performance issues, though executives noted that seasonal product assortment challenges are behind them.
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