Gap Inc. has appointed Michael Francis as the new CEO of Old Navy, effective November 2, as the retailer looks to improve performance at its largest brand following a period of weaker sales. Current Old Navy CEO Haio Barbeito will transition into an advisory role after leading the brand since 2022.
Leadership Change at Old Navy
Gap CEO Richard Dickson described the transition as a planned move designed to prepare Old Navy for its next phase of growth. He said the company is not changing its overall strategy but is focused on improving execution, strengthening the core business, and accelerating growth initiatives.
Francis, who joined Old Navy as chief customer officer in May, said the brand will continue focusing on customer engagement, cultural relevance, improving the customer experience, and building on recent momentum.
Old Navy Sales Continue to Struggle
Old Navy reported second-quarter net sales of $2.1 billion, a 4% decline compared with the previous year. Comparable sales also fell 4%, compared with 2% growth during the same period last year.
The decline marked Old Navy’s first negative comparable sales performance since the second quarter of 2023. Gap attributed the weakness partly to an unexpected slowdown in customer traffic and underperforming summer marketing campaigns that lacked a clear product message.
Old Navy remains Gap Inc.’s largest revenue contributor, representing nearly 60% of the company’s total revenue.
Gap Reports Mixed Second-Quarter Results
For the fiscal second quarter, Gap exceeded earnings expectations but fell slightly short on revenue. The company reported:
- Adjusted earnings per share: 52 cents compared with 48 cents expected.
- Revenue: $3.65 billion compared with $3.69 billion expected.
Net income reached $501 million, or $1.38 per share, compared with $216 million, or 57 cents per share, in the same period last year. Sales declined slightly from $3.73 billion a year earlier.
Gap said its earnings benefited from approximately $512 million in tariff-related refunds. Excluding the impact of those refunds, gross margin still improved slightly year over year.
Performance Across Gap Brands
The company’s namesake Gap brand delivered strong results, with comparable sales increasing 10% and net sales rising 9% to $844 million. The company credited growth to stronger brand storytelling and demand across denim, fleece, and children’s categories.
Banana Republic also improved, with comparable sales increasing 3% and net sales reaching $478 million. Gap said the brand continued making progress with its product assortment.
Athleta remained a challenge, with comparable sales declining 12% and net sales reaching $264 million. The company said Athleta is focused on rebuilding the brand through more disciplined execution.
Updated Financial Outlook
Gap narrowed its full-year revenue growth forecast due to continued weakness at Old Navy. The company now expects net sales growth between 1% and 1.5%, compared with the previous forecast range of 1% to 2%.
Despite lowering its sales outlook, Gap raised its adjusted earnings per share forecast for the year from $2.30 to $2.40 to a range of $2.35 to $2.45.
Management said consumer demand remains resilient but increasingly selective, with sales growth continuing across different income groups.
