Gap Names Michael Francis Old Navy CEO as Q2 Profit Beats Estimates

Proactive | Thu, August 27, 2026 at 1:45 PM PDT | 2 min read

Gap Inc (NYSE: GPS) raised its full-year profit forecast after posting better-than-expected quarterly earnings, driven by strong sales growth at its namesake brand, sending shares up more than 11%.

Key Financial Highlights

• Adjusted earnings: $0.52 per share in Q2, topping analyst estimates of $0.48
• Gross margins: Expanded 20 basis points to 41.4%
• Revenue: $3.7 billion, roughly in line with estimates of $3.69 billion but down 2% year-over-year
• Net income: $501 million
• Free cash flow: $261 million year-to-date

Brand Performance

| Brand | Revenue | Year-over-Year Change | |-------|---------|-----------------------| | Gap | — | Comparable sales up 10% | | Old Navy | $2.1 billion | Net revenue down 4% | | Banana Republic | $478 million | Up 1% | | Athleta | $264 million | Down 12% |

Overall comparable sales across the company fell 1% year-over-year.

Guidance

• Full-year adjusted earnings: Raised to a range of $2.35 to $2.45 per share, above the $2.34 analyst estimate
• Full-year revenue growth: Expected at 1% to 1.5%
• Q3 revenue growth: Forecast at 1.5% to 2.5% year-over-year
• Q3 gross margin expansion: 25 to 75 basis points
• Q3 operating expenses: Slight leverage expected

Leadership Change

Gap announced that Michael Francis will become the next President and CEO of Old Navy, succeeding Haio Barbeito.

Executive Commentary

Richard Dickson, CEO of Gap Inc, said:

"Continued operational and financial rigor contributed to gross margin strength, resulting in the company exceeding profit expectations."

"We have work to do at Old Navy, but we are taking targeted actions that are already driving improved results."

Dickson added that Old Navy is "poised for its next chapter of growth" and described Francis as "one of the most respected commercial, brand and customer leaders in retail."