Gap Inc. announced a leadership change at its Old Navy division, appointing Michael Francis to the chief executive role effective in early November. Francis, who assumed the position of chief customer officer at Old Navy in May, will replace current CEO Haio Barbeito, who will transition to an advisory capacity. Barbeito has led the division since 2022. Gap’s chief executive Richard Dickson characterized the move as a planned shift designed to position Old Navy for renewed growth, emphasizing continuity in strategy while committing to improved execution and execution of new growth initiatives.
The announcement came as Gap reported mixed financial results for its fiscal second quarter. Old Navy, which generates approximately 60% of Gap’s total revenue, posted net sales of $2.1 billion, representing a 4% year-over-year decline. Comparable sales at the banner also fell 4%, compared to analyst expectations of a 2.4% decline. The company attributed the weakness partly to softer traffic during summer months and acknowledged that its summer marketing campaign lacked clear product messaging. However, Dickson noted the division has begun showing sales and traffic improvement in recent weeks as seasonal inventory challenges have largely passed.
Across Gap Inc.’s portfolio, results were uneven. The namesake Gap banner demonstrated strong performance with comparable sales growth of 10% and net sales increasing 9% to $844 million, driven by product categories including denim, fleece, and children’s apparel. Banana Republic posted comparable sales growth of 3% and net sales of $478 million. Athleta, however, experienced a significant contraction with comparable sales declining 12% to net sales of $264 million.
Gap reported net income of $501 million, or $1.38 per share, compared with prior-year results of $216 million and 57 cents per share. Adjusted earnings per share stood at 52 cents when accounting for one-time items, notably tariff refunds totaling approximately $512 million. The company narrowed its full-year net sales growth guidance to a range of 1% to 1.5%, down from the prior range of 1% to 2%, while raising adjusted earnings per share expectations to a range of $2.35 to $2.45 from the prior range of $2.30 to $2.40. Gap’s stock price rose 12% in extended trading following the Old Navy announcement.
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