Gap Co. announced on Thursday the two are splittsville as the parent spins Old Navy off into a separate retailing entity. The other company, as yet unnamed, will consist of the well-known Gap and Banana Republic brands, plus the lesser-known Athleta, Intermix and Hill City.
“Following a comprehensive review by the Gap Inc. Board of Directors, it’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time, and each company now requires a different strategy to thrive moving forward,” said Robert Fisher, Gap Inc.’s Board Chairman, in a statement. “Recognizing that, we determined that pursuing a separation is the most compelling path forward for our brands.”
This includes distinct financial profiles and operating priorities, he added.
It was the latest phase of a move to “position our brands for growth,” Gap Inc. President and CEO Art Peck said. Each standalone company will have a “sharpened strategic focus and tailored operating structure,” he added. “As a result, both companies will be well positioned to capitalize on their respective opportunities and act decisively in an evolving retail environment.”
Also as part of the deal, 230 Gap stores will close over the next two years, the Associated Pressreported, and the prediction is that 40 percent of the retailer’s business will be generated online after the restructuring.
Gap’s stock jumped 25 percent after the announcement, rising by $6.50 to $31.90 in extended trading, AP said. Analysts favored the strategy…..