• by Sarah Mahoney , 5 hours ago

Gap’s transformation journey has hit some roadblocks, and the apparel giant hopes that shaking up management at its Old Navy division will solve at least some of the problems.

After ten consecutive quarters of sales growth, the company just posted a 2.4% sales decline for the second quarter to $3.65 billion, with comparable sales falling 1%, below expectations.

Gap is elevating Michael Francis to Old Navy CEO, replacing Haio Barbeito, who will transition into an advisory capacity. Quarterly sales at Old Navy took a bigger hit, falling 4% to $2.1 billion

Francis, who has held key marketing, advisory and leadership roles at JCPenney, Walmart, DreamWorks Animation and Target, as well as serving as president of JCPenney, joined Old Navy in March 2026 as chief customer officer and head of Gap Inc.’s marketing shared services.

Reutersreports that the company’s shares jumped more than 20% on the news of Francis’ appointment. Fast Company also speculates whether Francis’ 26 years at Target, including its cheap-chic heyday in the 2000s, can translate to Old Navy, which has struggled to regain sales growth for years.

And in an interview with Women’s Wear Daily, Gap President and CEO Richard Dickson, said the change was not due to sales slippage. Calling it “a planned and thoughtful transition,” he noted Francis’ extensive experience, and that Francis has already had impact on the Old Navy brand. Francis will officially assume the new role in November.

“We didn't execute well on our seasonal assortment," Dickson told WWD. "The categories that really represented the challenge were swim, shorts, and dresses. But we diagnosed it, and sales have improved in August as fall product set in. The seasonal categories are behind us and we're on the right track.”

Old Navy -- Gap’s largest division by sales -- is currently running a denim campaign starring Cardi B. In the announcement, Dickson called Francis "one of the most respected commercial, brand and customer leaders in retail. His experience building iconic brands, cultivating customer connections, and driving transformation at scale will help Old Navy strengthen its relevance, accelerate growth, and deliver even greater value for customers." 

Despite the overall revenue decline, the Gap brand continues to sparkle, with second-quarter sales jumping 9% to $844 million.

The company credits marketing with the ongoing renaissance, with a new “focus on big ideas and culturally relevant storytelling.”

Banana Republic revenues eked out a 1% gain to $478 million.

Athleta continued to flounder, with sales plummeting 12% to $264 million. In recent weeks, the brand -- which competes directly with companies like Lululemon, Alo and Vuori -- has launched multiple marketing efforts, including “My World, My Rules,” focusing on strength.

Marketing Dive reports that the new approach will feature cinematic ads, more emphasis on social-first marketing and a sponsorship of singer Olivia Rodrigo’s first Daisy Chain Fields Festival.

In a conference call discussing the results, Dickson says that while Athleta remains challenged, he sees progress.

“As we continue to evolve our assortment, our priorities are clear,” he said. “We are increasing newness, reducing reliance on promotions, and seeking to rebuild customer engagement through better product and stronger storytelling…. With our turnaround efforts still in the early stages, we are continuing to take a measured and disciplined approach to inventory and marketing investments.”