Gap Shares Jump 14% After Naming Michael Francis as New Old Navy CEO

Shares of Gap Inc. (NYSE: GPS) rose approximately 14% in premarket trading Friday after the apparel retailer announced it had hired industry veteran Michael Francis as the new CEO of its Old Navy division. The move is a key part of management's strategy to reinvigorate the company's largest and most crucial brand amid a challenging consumer spending environment.

A Focus on Turnaround

The leadership change comes as Old Navy has struggled to maintain momentum, recently posting its first comparable sales decline in 12 quarters. According to the company's latest report, Old Navy's comparable sales fell 4% in the second quarter, even as the parent company's overall comparable sales grew 10%.

While Gap CEO Richard Dickson, who took the helm in 2023, has overseen improvements at the flagship Gap and Banana Republic brands, Old Navy has continued to lag. In a note, analysts at Jefferies said, "The appointment of a new Old Navy leader underscores management’s focus on stabilizing performance at the company’s largest banner."

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Financial Outlook and Context

Despite the challenges at Old Navy, Gap Inc. recently lifted its annual profit forecast after beating quarterly estimates, citing stronger pricing and sales at its namesake brand. However, the company narrowed its fiscal 2026 sales growth forecast to a range of 1% to 1.5%, down from a previous 1% to 2%, acknowledging ongoing economic uncertainty.

Analysts view the revival of Old Navy as critical to the company's long-term success. Neil Saunders, managing director of GlobalData, stated that Old Navy's weakness points to a broader issue beyond a "modest range misstep." He added, "Gap should be able to end the full fiscal year on a positive sales note, but it needs to get the big engine of Old Navy whirring again to keep advancing at a convincing pace."