Veteran retail executive Michael Francis will assume the role of CEO at Old Navy as Gap Inc. announces a major leadership change following another decline in sales.
Old Navy Brings in Michael Francis After Prolonged Sales Drop
Another period of lackluster performance has led to a top-level reorganization at Old Navy. Haio Barbeito, who has led the brand as CEO for four years, will leave the position on November 2, moving into an advisory role thereafter. The transition was made public by Gap Inc. on Thursday, attributing the decision to ongoing sales challenges at Old Navy, the company’s largest value-oriented label.
Michael Francis will step in as the new CEO. Since March, Francis has been at Gap Inc. and most recently worked as chief customer officer at Old Navy. His extensive experience spans high-profile positions with Walmart, DreamWorks Animation, J.C. Penney, and Target, making him a seasoned leader familiar with both retail and entertainment industries as he takes charge.
Declining Performance for Old Navy in Latest Quarter
Gap Inc.’s leadership update was delivered alongside its quarterly earnings, which revealed that Old Navy’s Q2 net sales dropped 4% versus last year to $2.1 billion. Sales at existing stores also went down 4%, which the company linked to a “sudden drop-off in traffic” during the reporting period, as outlined in their Q2 2026 press release.
The figures at Old Navy contrast with stronger performance elsewhere in the business. The Gap brand posted a 9% gain in Q2 net sales to $844 million, while like-for-like sales surged 10%. Banana Republic turned in modest growth, with net sales rising 1% to $478 million and comps up 3%. Athleta, by contrast, experienced double-digit decreases, with net sales and comps each declining 12%.
Altogether, Gap Inc.’s net sales for Q2 totaled $3.7 billion, a 2% decrease, and same-store sales slipped 1%. Growth in Gap and Banana Republic could not fully offset the significant declines at Old Navy and Athleta.
Focus on Old Navy’s Strategic Direction
Gap Inc. CEO Richard Dickson characterized Old Navy’s second-quarter showing as a “modest miss,” referencing longstanding issues with merchandising that also affected the previous quarter. He mentioned that updates such as new fall merchandise and marketing initiatives are starting to increase store visits and drive improvement in categories like women’s denim. Dickson clarified that Barbeito’s exit was expected and part of broader succession planning.
Nevertheless, some analysts believe the leadership transition points to more fundamental challenges. Neil Saunders, Managing Director at GlobalData, pointed out that Old Navy’s primary family-targeted shoppers are feeling financial strain, but also faulted the brand for not offering compelling reasons to shop. For Saunders, these persistent challenges “cannot simply be dismissed as a modest range misstep.” He believes new executive leadership is a key move in repositioning Old Navy and sparking renewed consumer enthusiasm.
Gap Inc., meanwhile, has seen mixed results across its portfolio. The core Gap brand, after years of difficulty, is showing signs of revival. Saunders attributed this improvement to “various collaborations and cultural activations,” which increase brand visibility, as well as to improved basics in fleece and denim driving better sell-through.
The Road Forward
This leadership overhaul at Old Navy signifies a significant strategic change for Gap Inc. as the company seeks to tackle its challenges at its flagship brand. With Michael Francis taking over as CEO, Gap Inc. is betting on a new direction. Whether his extensive retail experience can turn around Old Navy’s trajectory remains uncertain, but it is clear that the company is focused on regaining strength in its core value segment and adapting to changing consumer demands.