Gap Inc. Strategizes to Revitalize Old Navy Amid Sales Decline
By Editor • August 28, 2026 • 2 min read
Gap Inc. is taking decisive steps to rejuvenate Old Navy, which recently experienced its first sales drop in over two years, with a reported 4% decline in the second quarter. This slump has prompted the company to reassess its strategy as it aims to boost its largest brand back to profitability.
Effective November, Michael Francis will take the helm as Old Navy's CEO, replacing Haio Barbeito, who will transition to an advisory role. Francis, who joined Gap Inc. in March as the chief customer officer for Old Navy, previously served as Target's chief marketing officer, where he helped shape the retailer's “cheap chic” image. His extensive experience positions him well for the challenge ahead.
Gap Inc. CEO Richard Dickson and CFO Katrina O’Connell have been closely collaborating with the Old Navy team to identify shortcomings and strategize for improvement. Dickson expressed optimism about the brand's potential for recovery, noting that the decline in summer categories is easing, allowing for a focus on stronger categories such as denim and activewear. He highlighted that upcoming fall offerings would emphasize better fashion content and pricing.
This fall, Old Navy is set to introduce Old Navy Sport, a new activewear line, in approximately 40 stores, which aims to combine technical features with stylish offerings at attractive prices. Additionally, the Old Navy Beauty Co. has launched a nationwide rollout of its beauty products, expanding the brand’s reach into everyday essentials.
Old Navy's strategy also includes a collaboration with Fanatics, set to launch an exclusive range of licensed sports merchandise this September, coinciding with the football season. Dickson also mentioned a refreshed marketing approach, featuring high-profile collaborations, such as Cardi B’s involvement in the “Most Wanted Denim” campaign, which has already begun to show positive results.
Despite the challenges, Gap Inc. reported an overall net sales figure of $3.7 billion for the second quarter, marking a 2% decrease. Old Navy’s performance, however, is expected to stabilize, with projections indicating a potential flat to 1% decline in comparable sales for the upcoming quarter.
Investors reacted positively to Gap Inc.'s earnings report, which included an adjusted earnings per share of 52 cents, surpassing analysts' expectations. The stock saw a significant uptick, closing up approximately 13% following the announcement. Gap Inc. has also revised its earnings outlook for 2026, indicating a rise in projected earnings per diluted share.
In light of its mixed performance, analysts suggest that Gap Inc.'s future success depends on its ability to deliver quality products that resonate with today’s discerning consumers. The leadership change at Old Navy underscores the company's commitment to infusing operational rigor and cultural relevance into its largest brand.
Source: wwd.com
