Gap Inc.'s Growth Relies Heavily on Its Namesake Brand Amid Struggles at Old Navy
Gap Inc. (GAP) reported a fiscal second-quarter where its namesake brand was the only one showing meaningful growth, while other key brands like Old Navy declined in sales. Despite an overall drop of 2% in total company net sales to $3.7 billion, Gap's standalone brand saw a 9% increase with strong comparable store sales. The performance gap is significant because Old Navy accounts for nearly 57% of the company’s revenue and its decline offset much of the growth from smaller brands. The company announced leadership changes at Old Navy to address underperformance, naming Michael Francis as new CEO following Haio Barbeito's departure. While reported gross margin improved due in part to a $417 million tariff refund benefit, adjusted figures showed more modest gains. Gap Inc. raised its full-year earnings outlook but lowered the top end of net sales guidance slightly. The stock price rose about 13% following these results and updated forecasts, reflecting investor optimism around potential improvements at Old Navy and continued momentum for the core Gap brand.
Tickers: $GAP