Gap shares jump 12% after company names new Old Navy CEO to revive struggling brand
Gap announced a new CEO for Old Navy on Thursday as the brand reported a decline in comparable sales for the most recent quarter.
Gap Inc. announced on Thursday that they have appointed Michael Francis, a seasoned industry professional, as the new CEO of Old Navy, with the aim of revitalizing the struggling brand. The leadership change came alongside a beat in Old Navy's quarterly profit and an optimistic forecast for the company.
CEO Richard Dickson, who has been with the company for three years, acknowledged the need for new leadership at Old Navy, stating that the brand's full potential could be unlocked under Francis. He mentioned that Old Navy’s current collections, like dresses and shorts, underperformed in the second quarter, but they anticipate that their fall assortment, encompassing sweaters and denim jeans, will attract more customers.
The turnover at Old Navy is part of Gap Inc.'s strategy to inject the same cultural relevance that has drawn customers to other brands such as Gap and Banana Republic. To attract younger shoppers, Gap Inc. has ramped up its marketing efforts, including partnerships with Grammy-winning artist Cardi B and collaborations with YouTuber MrBeast on a back-to-school campaign.
Gap's broader strategy of embracing current trends and expanding its marketing campaigns has helped maintain relevance despite consumers being more cautious with discretionary spending. As a result, the company managed to boost its average unit retail price across all Gap Inc. brands in the quarter, leading to an 80 basis point increase in adjusted merchandise margin, excluding the impact of net benefits tied to tariff recovery.
Comparable sales at Gap Inc. overall rose by 10% in the second quarter, marking the company's eleventh consecutive quarter of growth. However, Old Navy’s comparable sales fell by 4%, while Athleta’s fell by 12%, a slight improvement from the previous year's declines.
Francis' appointment is seen as crucial for Old Navy’s future, according to Dickson. The new leadership is expected to bring cultural relevance to Old Navy, mirroring the customer appeal of other Gap Inc. brands. Analyst Suzy Davidkhanian noted that the change signifies Gap Inc.'s push to match the cultural appeal that has drawn shoppers to Gap to its largest brand, Old Navy.
Written by urgent.news from Investing.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
