On August 27, Gap announced that Michael Francis will take over as CEO of Old Navy effective November 2, succeeding Haio Barbeito, who will transition to an advisory role. This leadership change comes as Old Navy faces challenges, with net sales dropping to $2.1 billion, a 4% decline compared to the previous year, and comparable sales also down 4%.
Gap's CEO Richard Dickson described the transition as a 'planned and thoughtful' move to enhance Old Navy's growth strategy. Despite the disappointing sales, Dickson noted that there has been a recent uptick in traffic and sales.
The company reported mixed fiscal second-quarter results, beating earnings expectations but falling short on revenue, with total sales of $3.65 billion against an expected $3.69 billion. Gap's overall comparable sales decreased by 1%, influenced by a 3% drop in in-store sales.
The company has adjusted its full-year sales growth outlook downwards due to Old Navy's struggles but raised its earnings per share forecast. Notably, Gap's namesake brand saw a 10% increase in comparable sales, indicating some segments are performing well. The company's gross margin benefited from tariff refunds, which Gap plans to use to reduce product costs.
Overall, the leadership change at Old Navy is a critical step for Gap as it seeks to reverse the brand's sales decline and improve its market position