Gap Inc. shares jumped as much as 24.1% after the retailer named Michael Francis as chief executive officer of its Old Navy brand and raised its annual profit forecast.

The leadership appointment comes as Old Navy, Gap's biggest brand, struggles with falling comparable sales, while the company's other brands gain momentum. Investors responded to the announcement by betting on a turnaround at the struggling banner.

Old Navy is the largest of Gap Inc.'s brand portfolio, which also includes Gap, Banana Republic, and Athleta. Founded in 1994, Old Navy has long served as the company's primary revenue driver, focusing on value-priced apparel for families. The brand has faced uneven performance in recent years as competition in the value-apparel segment intensified, with value-focused rivals and big-box retailers competing aggressively on price for family apparel.

The dual announcements of a new Old Navy CEO and a raised profit outlook drove the sharp share rally. Executive changes at major retail banners are often watched closely by investors as a signal of strategic direction, and a CEO hire paired with a higher profit outlook reinforced the market's read that Gap Inc. sees a credible path to stabilizing its largest brand. Gap Inc., headquartered in San Francisco, is listed on the New York Stock Exchange under the ticker GPS.

Going forward, investors will be watching whether the new Old Navy leadership can reverse the brand's comparable sales declines in upcoming quarterly reports, and whether the raised profit forecast holds as the value-apparel segment remains competitive.

Source: Economic Times Markets