Gap Inc. announced a leadership change at Old Navy, with Michael Francis, who joined the brand as chief customer officer in May, set to assume the CEO position effective November 2. He will replace Haio Barbeito, who has led the division since 2022 and will transition to an advisory role. Gap’s chief executive, Richard Dickson, characterized the transition as a planned shift designed to strengthen Old Navy’s operational execution while maintaining the company’s existing strategic direction.
The announcement came as Old Navy, which generates nearly 60% of Gap’s total revenue, continues to face sales headwinds. During the fiscal second quarter ended August 1, Old Navy reported net sales of $2.1 billion, representing a 4% year-over-year decline. Comparable sales also fell 4%, exceeding Wall Street’s expectation for a 2.4% decline. The brand attributed the contraction partly to an unanticipated slowdown in customer traffic. Company leadership noted that underperforming summer marketing campaigns, which lacked direct product messaging, contributed to the weak results. However, Dickson indicated that Old Navy has begun experiencing improved traffic and sales performance in the month since the earnings period ended.
Gap Inc. posted mixed overall results for the quarter, achieving net income of $501 million or $1.38 per share on sales of $3.65 billion. The company exceeded analyst earnings estimates but fell short on revenue expectations. Comparable sales across Gap Inc. declined 1%, driven largely by Old Navy’s performance challenges. Gap’s namesake banner performed substantially better, with comparable sales jumping 10%, surpassing analyst expectations of 8.6% growth, while net sales reached $844 million. Banana Republic also showed gains with comparable sales up 3% and net sales of $478 million, though Athleta struggled with a 12% decline in comparable sales and net sales of $264 million.
The company adjusted its full-year outlook, narrowing its net sales growth guidance to a range of 1% to 1.5% from the prior 1% to 2% range due to Old Navy’s underperformance. Gap simultaneously raised its adjusted earnings per share expectations to a range of $2.35 to $2.45 from $2.30 to $2.40, partly benefiting from an approximately $512 million tariff refund received during the quarter. Gap’s stock responded positively to the leadership announcement, climbing 12% in extended trading.
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