Gap Inc. unveiled a leadership change at its Old Navy subsidiary, naming Michael Francis to the chief executive position, effective Nov. 2. Francis, who joined Old Navy as chief customer officer in May, replaces Haio Barbeito, who held the role since 2022 and will transition to an advisory capacity. The announcement drew investor enthusiasm, with Gap shares rising 12% in extended trading following the news.
Old Navy has faced significant performance challenges in recent months. During the fiscal second quarter ended Aug. 1, the brand reported net sales of $2.1 billion, representing a 4% decline year over year, with comparable sales also declining 4%. This marked the division’s first negative comparable sales figure since the second quarter of 2023. Company leadership attributed the weakness partly to an “unanticipated slowdown in traffic” and acknowledged that summer marketing efforts “lacked a direct product message.” However, executives indicated the brand had begun showing signs of recovery later in the period.
Old Navy accounts for nearly 60% of Gap Inc.’s overall revenue, making its performance critical to the parent company’s results. The broader company reported mixed results for the quarter, with net income of $501 million, or $1.38 per share, compared with $216 million, or 57 cents per share, in the prior year. Sales declined slightly to $3.65 billion from $3.73 billion year over year. On an adjusted basis excluding one-time items, the company reported 52 cents per share.
Gap Inc. also narrowed its full-year net sales growth guidance to a range of 1% to 1.5% from the previous range of 1% to 2%, citing Old Navy’s seasonal product assortment challenges. The company raised its adjusted earnings per share expectations to $2.35 to $2.45 from $2.30 to $2.40. Other divisions showed stronger performance, with the namesake Gap banner posting comparable sales growth of 10% and Banana Republic achieving 3% comparable sales growth, though Athleta experienced a 12% decline in comparable sales.
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