Gap Inc. has announced a leadership change at its largest brand, Old Navy, amid challenging sales performance. Current Old Navy CEO Haio Barbeito will transition to an advisory position on 2 November after a four-year tenure. Taking over is Michael Francis, who joined Gap Inc. in March and has held dual roles, including chief customer officer at Old Navy. Francis brings experience from Walmart, DreamWorks Animation, J.C. Penney, and Target.
Leadership Change Follows Sales Challenges
This shift follows Old Navy’s ongoing struggle to meet sales expectations. During the company’s second quarter, net sales at Old Navy declined by 4% year over year to $2.1 billion, alongside a 4% drop in comparable store sales, partly attributed to an unexpected dip in shopper traffic. The announcement of the leadership change coincided with Gap Inc.’s report on these results.
Comparison with Other Gap Inc. Brands
Other brands under the Gap Inc. umbrella, including the Gap namesake and Banana Republic, outperformed Old Navy in the same period. Gap brand net sales surged by 9% to $844 million with a 10% increase in comparable store sales, while Banana Republic achieved a 1% rise in net sales to $478 million, with comps up by 3%. However, overall Gap Inc. net sales declined by 2% to $3.7 billion, influenced not only by Old Navy’s performance but also by a 12% drop in both net sales and comps at Athleta.
CEO’s Perspective on Old Navy’s Performance
Gap Inc. CEO Richard Dickson described Old Navy’s second-quarter results as only a “modest miss,” citing existing merchandising issues that had impacted the first quarter as well. He noted that new fall styles and marketing efforts have begun to drive traffic and bolster women’s denim sales.
Despite classifying Barbeito’s departure as pre-planned, some analysts interpret it as a step towards addressing Old Navy’s difficulties. Neil Saunders, Managing Director of GlobalData, remarked that while Old Navy’s primary consumer demographic faces financial pressure, the brand’s offerings failed to sufficiently attract customers, making it a significant challenge that requires strategic correction.
Conversely, Gap has experienced a resurgence under Dickson’s leadership, gaining momentum after years of lacklustre performance. According to Saunders, the brand has achieved a notable recovery, driven by its cultural relevance and strong performance in categories like fleece and denim.
Reporting based on coverage first published by retaildive.com.