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Shakeup at Old Navy continues amid merchandising struggles

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Shakeup at Old Navy continues amid merchandising struggles

Nicole Colombo, who led fashion at Walmart’s marketplace, is now head of women’s merchandising at Gap Inc.’s value brand.

The turnover in Old Navy leadership continues after merchandising struggles that seem more entrenched than Gap Inc. executives first realized. In Q1, after tepid growth, they identified fashion and pricing misses that they said were quickly being rectified, but in Q2 sales and comps both fell 4%.

Now Gap Inc. is installing a new team. On Monday, Michael Francis takes over from Haio Barbeito as Old Navy CEO. Barbeito, once CEO at Walmart Canada, took the reins at Old Navy four years ago. Francis, whose previous work included an advisory role at Walmart, had dual roles at Gap Inc. when he arrived in May, including chief customer officer at Old Navy.

Still, there has been some concern that Gap Inc. isn’t adequately addressing “the recent slowdown at Old Navy, which could be more persistent than management expects,” Needham analysts led by Tom Nikic said last week.

The brand introduced an activewear subbrand in September and is getting into accessories and beauty, which Gap Inc. CEO Richard Dickson earlier this year called higher margin “sleeper categories.”

But the more culture-oriented marketing that has resonated with Gap brand customers may not work as well at Old Navy. There was a surprise traffic dip in June that Evercore ISI analysts led by Michael Binetti tied to the brand’s marketing approach.

“Traffic dropped off as marketing pivoted away from product focus to more of a brand campaign, and per GAP, once it switched back to product marketing traffic trends stabilized,” Binetti said.


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