Gap Stock Jumps 12% as Old Navy names New CEO Business Honor

Gap Stock Jumps 12% as Old Navy Turns to Michael Francis for a Revival

Retail

Gap stock jumped 12% after Michael Francis was named Old Navy CEO as weak sales test the retailer’s turnaround strategy and raise fresh questions.

Gap stock jumped 12% after Michael Francis was named the new Old Navy CEO.
Old Navy sales fell 4% to $2.1 billion, missing expectations.
Michael Francis takes charge Nov. 2, replacing Haio Barbeito.
Gap Inc. comparable sales declined 1%, despite strong results from the Gap brand.
Gap cut its sales outlook, raising pressure on Old Navy to recover.

Gap stock raised by 12% during extended trading on Thursday, following Gap Inc.'s announcement that Michael Francis, a retailing expert, would be the CEO of Old Navy.

Francis, currently serving as the Chief Customer Officer at Old Navy, will become the CEO starting November 2. Barbeito, who has served as the CEO of the brand from 2022 to date, will become an advisor to the firm.

This leadership change has been made following a tough quarter for Old Navy. Net sales plunged by 4% year-over-year to reach $2.1 billion, with comparable Retail sales declining by 4%. Analysts had forecasted only a 2.4% decrease.

Is Gap changing the leader or confronting a deeper problem?

Old Navy is very important for Gap Inc., since the brand brings almost 60% of revenues for the corporation. The company cited unusual decline in traffic and admitted that the summer marketing campaign did not have a clear product message.

Gap CEO Richard Dickson described the transition as planned and said the company’s strategy remains unchanged. The focus, he said, is on improving execution while rebuilding momentum.

Meanwhile, the broader Gap earnings report delivered a mixed picture. The company posted adjusted earnings of 52 cents per share, ahead of Wall Street’s 48-cent estimate. Revenue reached $3.65 billion, slightly below the $3.69 billion expected.

Could Old Navy become the weak link in Gap’s recovery?

The company’s namesake brand provided a sharp contrast. Comparable sales increased 10%, while net sales climbed 9% to $844 million. Banana Republic also delivered a 3% comparable-sales increase.

Athleta remained a major concern, with comparable sales falling 12% to $264 million in net sales.

Gap has narrowed its full-year net sales growth forecast to between 1% and 1.5%, down from its previous 1% to 2% range. However, adjusted earnings guidance increased to $2.35-$2.45 per share.

Is the Gap stock jump signaling confidence or relief?

Francis now faces pressure to restore Old Navy’s appeal without disrupting the progress elsewhere in the portfolio. The numbers suggest Gap has pockets of strength, but Old Navy’s scale makes its weakness difficult to ignore.

The bigger question is whether a leadership change can fix execution issues that the company itself has already identified. For Gap stock investors, the next few quarters may reveal whether Francis is the solution or simply the latest test of Gap’s turnaround strategy.

Gap has strong spots, but Old Navy remains too important to overlook. Francis now faces a clear test: restore traffic, sharpen the product message and rebuild sales. Business Honor asks will this leadership change strengthen Gap stockor expose deeper problems within the brand?