Gap Inc. announced Thursday that Michael Francis would assume the role of chief executive officer at Old Navy beginning in November, taking over from Haio Barbeito, who will transition to an advisory position. Francis previously held the position of chief customer officer at Old Navy, which he had occupied since May. The leadership transition marks a planned effort to address performance challenges at the subsidiary, which represents approximately 60% of the company’s total revenue.
Old Navy faced significant headwinds in its most recent fiscal quarter, reporting net sales of $2.1 billion, representing a 4% decline compared to the prior year period. Comparable sales fell 4% year-over-year, exceeding Wall Street’s expected decline of 2.4% and marking the brand’s first negative comparable sales performance since the second quarter of 2023. Gap’s leadership attributed the weakness partly to a decrease in customer traffic and characterized the brand’s summer marketing efforts as lacking clarity in product messaging. However, executives noted that the division has begun experiencing improved performance in subsequent weeks.
Gap’s broader second-quarter results showed a mixed performance relative to expectations. The company surpassed analyst estimates on earnings per share while falling short on total revenue, with net sales declining to $3.65 billion from $3.73 billion year-over-year. The company’s namesake Gap banner performed strongly, with comparable sales climbing 10%, exceeding Wall Street projections of 8.6% growth. By contrast, Athleta experienced a significant downturn, with comparable sales declining 12%. Banana Republic posted more modest gains with comparable sales up 3%.
The announcement of Francis’s appointment prompted a favorable market response, with Gap shares rising 12% in extended trading. Gap Chief Executive Richard Dickson characterized the leadership change as a continuation of existing strategy rather than a fundamental shift, emphasizing the company’s focus on operational improvements and accelerating growth initiatives. For the full fiscal year, the company adjusted its net sales growth outlook downward to a range of 1% to 1.5% due to Old Navy’s challenges, though it raised adjusted earnings per share guidance to a range of $2.35 to $2.45.
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