Gap stock jumps after Michael Francis named Old Navy CEO

Gap shares rose about 17% in premarket trading after the company named industry veteran Michael Francis president and CEO of Old Navy. Francis will take over the chain on Nov. 2, replacing Haio Barbeito.

Old Navy posted a 4% decline in comparable sales in the second quarter, the first comparable-sales drop for the brand in 12 quarters. Seasonal merchandise and a sharper-than-expected slowdown in customer traffic were cited as the main factors behind the weakness.

Gap CEO Richard Dickson acknowledged the company entered the second half with mixed performance across its brands and that revenue fell short of company targets, while operational discipline helped support gross margins.

Since Dickson became CEO in 2023, Gap has reorganized leadership and marketing. Gap and Banana Republic have shown stronger results; Old Navy has lagged. Management plans a targeted push at Old Navy, focusing on denim, activewear, sweaters and knits, and will expand Old Navy Sport this fall. The company described Old Navy as the third-largest denim brand in the U.S.

Analysts viewed the leadership change as an effort to stabilize Old Navy. Jefferies framed the appointment as aimed at steadying the brand. Neil Saunders of GlobalData pointed to pressure on the brand’s customer base and argued Old Navy has not given shoppers enough reasons to return. Morgan Stanley raised its price target on Gap to $23 from $21 while keeping an Equalweight rating, citing better-than-expected second-quarter results, constructive trends at Old Navy and resilient margins, and noting it needs clearer signs of improvement in the second half.

Gap beat quarterly expectations, helped by stronger pricing and sales at its namesake brand, and raised its annual profit forecast. The company narrowed its fiscal 2026 revenue growth outlook to 1%–1.5% from a prior range of 1%–2% because of economic uncertainty and increased adjusted earnings-per-share guidance to $2.35–$2.45 from $2.30–$2.40.

Gap’s forward 12-month price-to-earnings ratio stood at about 8.33, below American Eagle Outfitters at 8.94 and Urban Outfitters at 11.93. Executives and analysts noted that restoring momentum at Old Navy will be important for Gap’s broader recovery, and management is relying on product assortment changes, marketing and leadership adjustments to try to return the brand to growth in the second half.