Gap Inc. announced a leadership change at its Old Navy division, appointing Michael Francis to the chief executive position effective November 2. Francis, who joined Old Navy as chief customer officer in May, will succeed Haio Barbeito, who has led the brand since 2022 and will transition to an advisory role.
The move comes as Old Navy faces significant performance challenges. In the fiscal second quarter, the brand reported net sales of $2.1 billion, representing a 4% decline compared to the prior year, and comparable sales also fell 4%. This marked Old Navy’s first negative comparable sales performance since the second quarter of 2023. Analysts had anticipated a more modest 2.4% decline. Old Navy contributes approximately 60% of Gap Inc.’s total revenue.
Gap leadership attributed Old Navy’s underperformance partly to an unsuccessful summer marketing campaign that lacked clear product messaging and an unanticipated traffic slowdown. However, executives indicated the brand has begun experiencing improved traffic and sales in recent weeks. In his statement, incoming CEO Francis committed to refocusing on customer engagement, strengthening brand relevance, and improving the customer experience across all channels.
Gap Inc. reported mixed overall results for the quarter ended August 1. The company beat earnings-per-share estimates at $1.38 per share but underperformed revenue expectations at $3.65 billion. Comparable sales for the company declined 1%, though the broader Gap banner and Banana Republic showed strength with 10% and 3% comparable sales growth respectively. Athleta experienced a steeper decline, with comparable sales down 12%.
The company adjusted its full-year outlook, narrowing net sales growth guidance to a range of 1% to 1.5% from the previous 1% to 2% range, while raising adjusted earnings-per-share expectations to a range of $2.35 to $2.45 from the prior $2.30 to $2.40 range. Notably, a significant portion of earnings improvement derived from approximately $512 million in tariff refunds received during the quarter.
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