Gap's stock jumped by?about 22 percent in early Friday trading after the apparel retailer named industry veteran Michael Francis as CEO of Old Navy.

Gap's largest brand, Old Navy, has been struggling to gain traction with select women's clothing categories over the past few quarters. This is a major obstacle in Gap's turnaround.

Gap's leadership and marketing have been revamped since CEO Richard Dickson assumed control in 2023. This has boosted Gap, Banana Republic and Old Navy, while Old Navy continues its decline.

Neil Saunders of GlobalData said that Gap could no longer dismiss the problem as "a modest range misstep".

Several retailers are looking to bring in new leaders to revitalize their struggling brands. Kate Spade, Tapestry, appointed Jonathan Saunders last month as its executive creative director.

Jefferies analysts wrote in a report that the appointment of a New Old Navy leader demonstrates management's commitment to stabilizing performance for its largest banner.

Francis joined Gap as Old Navy's Chief Customer Officer in March. Francis has over 40 years of experience in marketing, business transformation, and commercial activities, including roles with Target?and Walmart.

Gap's annual profit forecast was raised after exceeding quarterly expectations. Despite this, the company lowered its forecast for fiscal 2026, citing uncertainty in the economy.

Old Navy's comparable quarterly sales were down by?4% - the first drop in 12 quarters.

The forward 12-month price-to earnings ratio of the company was 8.33, while American Eagle Outfitters had an 8.94 and Urban Outfitters had 11.93.

Saunders stated that "Gap will be able to?end the fiscal?year with a positive note. But?it must get Old Navy's big engine whirring once again in order to continue advancing at an impressive pace."

(source: Reuters)