Gap appointed a new chief executive officer for Old 'Navy on Thursday to reinvigorate a struggling brand. The apparel retailer had raised its yearly?profit forecast based on strong sales at its namesake label.

Shares of 'company? soared by 16% during extended trading due to the better than expected results of Gap and the appointment of Michael Francis as Old Navy CEO.

Three years after Richard Dickson became CEO, the company has been working to re-energize demand following a period of inconsistency across its Banana Republic banners, Athleta, and Old Navy. The company's brands have become more relevant as a result of marketing campaigns and merchandise that is based on the latest trends.

Gap's name-brand posted a 10% increase in comparable sales for the second quarter. This is its tenth consecutive quarter of growth. LSEG data shows that analysts, on average expected a rise in sales of 8.8%.

Old Navy's comparable sales dropped 4% during the quarter, after a 2% rise a year ago. Athleta, on the other hand, saw a drop of 12%, following a decline of 9% last?year.

Dickson stated, "We still have work to be done at Old Navy but we understand the factors that impact performance and have taken targeted actions which are already driving better results."

Suzy Davidkhanian, an analyst at eMarketer, said that Gap's mixed performance highlights the fact that "today’s more deliberate consumer needs a good reason to spend money on branded goods."

She added that the Old Navy leadership shift is a sign of 'the company's drive to bring to its largest brand the same cultural relevancy that attracted shoppers to Gap.

Gap has raised its forecast for adjusted earnings per share by 5 cents at both ends, to a range between $2.35 and $2.45. The outlook excludes the $95 million in tariff refunds and the $5 million related interest income in the quarter reported, as well as any future benefits.

The company has revised its outlook for fiscal 2026?sales growth to between 1%-1.5 percent, down from an earlier range of?1%-2%. Analysts expect a 1.1% rise.

Gap's outlook takes into account consumer trends, the wider economic and geopolitical climate and risks associated with energy prices and U.S. Tariffs.

The revenue for the quarter ended August 1 was down 2% at $3.65 billion. This is just a hair below analysts' expectations of $3.69 billion. However, adjusted profit per share of 52 cents beats analyst expectations of 48 cents.

(source: Reuters)