Old Navy Chief Out as Sales Falter Again—But the Real Story Is the Gap Brand's Stunning Comeback

 Old Navy Chief Out as Sales Falter Again—But the Real Story Is the Gap Brand's Stunning Comeback

## The company's former "star" has dimmed, but Gap Inc. has found an unlikely new hero: the namesake brand, which has become the "star of the show" after years in the doldrums.

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### A Leadership Shakeup at the Crown Jewel

On August 26, 2026, Gap Inc. announced a significant leadership change at its biggest revenue driver. **Haio Barbeito is out as CEO of Old Navy after four years at the helm**, transitioning to an advisory role effective November 2 . His replacement is **Michael Francis**, a retail industry veteran with deep experience at Target (26 years) and Walmart (10 years), who joined the company in March as chief customer officer .

CEO Richard Dickson framed the move as "a planned and thoughtful transition" to better equip Old Navy for its next chapter . However, the timing—coming on the heels of a disappointing quarterly report—suggests the company needed to act decisively to address growing concerns about its largest brand.

### The Numbers That Tell the Story

Old Navy's Q2 2026 performance was disappointing by any measure. Net sales fell **4% year-over-year to $2.1 billion**, with comparable sales down **4%** . This marked the brand's **first negative same-store sales figure since the second quarter of 2023** . Wall Street analysts had expected a decline of just 2.4%, making the miss more pronounced .

The weakness was driven by "an unanticipated slowdown in traffic" and a summer marketing campaign that "lacked a direct product message," according to Dickson . The CEO acknowledged the company "didn't execute well on seasonal product," calling the issue "seasonal" and noting that it was behind them .

"The family demographic that Old Navy serves is under pressure, but Old Navy did not give them enough reasons to buy," said Neil Saunders, managing director of GlobalData . "In our view, this is now quite a serious challenge that the group needs to correct."

### The Silver Lining: Gap Brand's Resurrection

While Old Navy stumbled, the **Gap brand** posted a remarkable turnaround. Net sales rose **9% to $844 million**, with comparable sales surging **10%** . Under Dickson's leadership, the brand has labored to regain cultural relevance, and the efforts are paying off .

"The various collaborations and cultural activations are certainly helping to keep the brand in the spotlight and are driving sales," Saunders said . "But growth has also moved beyond this as healthy uplifts are being produced across the core assortment in categories like fleece and denim."

Banana Republic also showed modest improvement, with net sales up **1% to $478 million** and comparable sales rising **3%** . Athleta continued to struggle, posting a **12% decline in both net sales and comparable sales** .

### Overall Gap Inc. Performance: A Mixed Picture

Gap Inc.'s overall Q2 results reflected the divergent performance of its brands. **Total net sales fell 2% to $3.7 billion**, and comparable sales dropped **1%** . Earnings per share of **$0.52 beat estimates**, but revenue of **$3.65 billion slightly missed** expectations .

The company narrowed its full-year net sales growth outlook from **1% to 2% down to 1% to 1.5%** due to Old Navy's lag . However, Gap **raised its annual profit forecast**, helped by stronger pricing at the Gap brand and a **tariff refund** that boosted gross margins significantly in the quarter .

### The Michael Francis Playbook

Francis brings deep retail experience to his new role . He has held advisory and leadership positions at DreamWorks Animation, J.C. Penney, and Target . His approach is focused on **"customer experience, brand relevance, and momentum-building"** .

Incoming CEO Francis said the brand would "continue to sharpen our customer focus, strengthen the brand's cultural relevance, enhance the customer experience across every touchpoint and build on the momentum already underway" .

Jefferies analysts noted that "the appointment of a new Old Navy leader underscores management's focus on stabilizing performance at the company's largest banner" .

### The Challenge Ahead

Old Navy contributes **nearly 60% of Gap's overall revenue**, making its performance critical to the company's success . The brand's struggles have been building over several quarters, with weakness in select women's apparel categories .

Dickson remains confident in the company's direction: "On balance, we're running a very disciplined organization with a playbook that is working. These things take time. I think, pointing to Gap as the lead success story of our playbook, you can see the ability for us to actually deliver relevance and revenue, and we're well on our way" .

But as Saunders warned, "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" .

### Key Takeaways

- **Leadership Change:** Michael Francis replaces Haio Barbeito as Old Navy CEO effective Nov. 2, 2026

- **Sales Drop:** Old Navy Q2 net sales fell 4% to $2.1B, with comps down 4%, first negative since Q2 2023

- **Gap Brand Soars:** Gap brand comps rose 10%, net sales up 9% to $844M, becoming "star of the show"

- **Gap Inc. Outlook:** Company narrowed full-year sales guidance but raised profit forecast

- **The Strategy:** Francis to focus on customer experience, brand relevance, and execution at Old Navy

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## Disclaimer

**IMPORTANT:** This article is for informational and educational purposes only. The information contained herein is based on publicly available sources and reflects the author's understanding as of the publication date. Corporate leadership changes, financial performance, and strategic initiatives are subject to change. This is not financial or investment advice. You should consult with qualified professionals for guidance on specific issues.

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*Published: August 28, 2026*