Gap Inc. named Michael Francis as the incoming chief executive officer of Old Navy, its largest revenue contributor. Francis, who joined the company as chief customer officer in May, will assume leadership on November 2, replacing Haio Barbeito, who will transition to an advisory role. Barbeito has served as Old Navy’s CEO since 2022.
The leadership change comes as Old Navy faces significant sales challenges. During the fiscal second quarter, the division posted net sales of $2.1 billion, declining 4% year over year, with comparable sales also down 4% compared to 2% growth in the prior-year period. This marked the brand’s first negative comparable sales performance since the second quarter of 2023. Wall Street analysts had anticipated a smaller decline of 2.4%. Gap’s chief executive Richard Dickson attributed some underperformance to inadequate execution on summer marketing campaigns that lacked direct product messaging, though he noted recent traffic and sales improvements.
Old Navy generates approximately 60% of Gap’s total revenue, making its performance critical to the parent company’s results. The broader Gap Inc. reported mixed quarterly outcomes, beating earnings expectations while missing on revenue. The namesake Gap banner performed strongly with comparable sales up 10%, while Athleta experienced a significant 12% decline in comparable sales. Banana Republic posted a 3% comparable sales increase.
For the full fiscal year, Gap narrowed its net sales growth outlook to a range of 1% to 1.5%, down from the prior 1% to 2% guidance, due to Old Navy’s slowdown. However, the company raised adjusted earnings per share expectations to a range of $2.35 to $2.45 from the previous $2.30 to $2.40 range. Gap’s stock surged 12% following the announcement of Francis’s appointment, reflecting investor optimism about the leadership transition and turnaround efforts at the challenged division.
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