Gap Inc. Names New Old Navy CEO as Retailer Navigates Mixed Quarterly Results

Gap Inc. announced a significant leadership shakeup on Thursday, appointing a new CEO for its powerhouse Old Navy brand as the parent company works to reverse declining sales and stabilize its largest revenue driver.

Michael Francis, who joined the company as Old Navy’s chief customer officer earlier this May, will step into the CEO role effective November 2. He succeeds Haio Barbeito, who has led the banner since 2022 and will transition into an advisory role with the company.

The announcement comes as Gap Inc. navigates a complex period of transformation. While the company reported a mixed fiscal second quarter, investors reacted positively to the leadership change and optimistic outlook, with shares of Gap jumping 12% in extended trading on Thursday.

Addressing the Old Navy Slump

Old Navy, which accounts for nearly 60% of Gap’s total revenue, has faced mounting pressure. In the second quarter, the brand reported net sales of $2.1 billion—a 4% year-over-year decline—and a 4% dip in comparable sales. The results fell short of Wall Street expectations and marked the brand’s first negative same-store sales figure since the second quarter of 2023.

Gap CEO Richard Dickson attributed the underwhelming performance to “unanticipated” lapses in marketing and seasonal product assortment. “We know we didn’t execute well on our seasonal product,” Dickson told CNBC, noting that the brand’s summer marketing lacked a clear message. However, he emphasized that the issue is now behind the company and noted that internal metrics have already shown “significant improvement” in traffic and sales over the past month.

Francis, the incoming CEO, stated that his immediate focus will be on sharpening the brand’s cultural relevance and enhancing the customer experience across all retail touchpoints.

A Company in Transition

The leadership shift arrives amidst the release of the company’s fiscal second-quarter earnings, which presented a tale of two realities for the retailer.

While Old Navy struggled, the namesake Gap brand served as a bright spot, with comparable sales surging 10%—comfortably outpacing the 8.6% growth analysts had projected. The company credited this momentum to successful “culturally relevant storytelling” in core categories like denim and fleece. Meanwhile, Banana Republic saw comparable sales rise 3%, and Athleta reported a 12% decline in comparable sales as it works through its own long-term turnaround plan.

Financial Outlook and Discipline

Despite the revenue headwinds, Gap Inc. outperformed earnings expectations. The company reported adjusted earnings per share of 52 cents, beating the 48-cent estimate from analysts.

The retailer also benefited from a one-time financial tailwind: the recovery of approximately $512 million in tariffs. These funds allowed the company to lower product costs and bolster gross margins. While Gap slightly lowered the top end of its full-year sales growth forecast to a range of 1% to 1.5% due to the Old Navy lag, it simultaneously raised its adjusted earnings-per-share outlook to $2.35–$2.45.

CEO Richard Dickson remains confident in the company’s broader trajectory. “We’re running a very disciplined organization with a playbook that is working,” he said. “We’re just going to continue to execute better, continuously improve our core business, while we drive some accelerators that we’re really excited about.”