Gap Taps New Old Navy CEO to Turn Around Sluggish Sales

The Gap, Inc. has appointed Michael Francis as the new president and CEO of Old Navy, effective November 2. This move follows Old Navy's disappointing second-quarter results, where net sales fell 4% year over year to $2.1 billion, with comparable sales down 4% from analysts' expectations of a 2.4% decline. Old Navy, which accounts for nearly 60% of Gap's total revenue, had not posted a negative comparable sales figure in 12 quarters.

CEO Richard Dickson attributed the decline to a lack of a direct product message in summer marketing, but noted that Old Navy has seen significant improvement in traffic and sales in recent months. Despite the underperformance, Gap's namesake brand showed double-digit comparable sales growth, and Gap shares jumped as much as 14% following the report.

The turnaround experience of Francis, who previously worked at Walmart, Target, and JCPenney, is expected to give him a strong starting point when he takes over the role. However, Old Navy's poor performance remains a concern, as it directly impacts the company's overall revenue and profitability. The firm has narrowed its full-year sales growth guidance to 1% to 1.5% due to Old Navy's underperformance, highlighting the significant impact the brand's struggles have on the company's results.