Gap to split, with Old Navy getting independence

Retailer to also close 230 Gap brand stores over the next two years

Gap Inc. is splitting into two.

The retailer said Thursday it’s creating two independent publicly traded companies — low-priced juggernaut Old Navy and a yet-to-be named company, which will consist of the iconic Gap brand, Banana Republic as well as the lesser known names Athleta, Intermix and Hill City.

The San Francisco-based company said the spin-off will enable each company to focus on flexibility and pare down costs.

The company also said it will be shuttering 230 Gap brand stores over the next two years. A year ago, the Gap brand had 725 stores worldwide. After the closures, which also include the 68 stores it shuttered this year, the chain will be down to roughly 427 stores. It expects to have more than 40 per cent of Gap’s business coming from online after the restructuring.

Gap’s stock surged 25 per cent in after-market trading.

The split up, which followed a comprehensive board review, comes as Old Navy has been thriving, while Gap still hasn’t been able to regain its footing despite numerous attempts to fix the business. Once the go-to place for casual clothing, Gap has been mired in a sales funk for years, hurt by increasing competition from the likes of Target and Amazon.

READ MORE: HBC shuttering Home Outfitters across Canada

Analysts applauded the move.

“This is great news for Old Navy, no longer having its success consistently outweighed by sluggish performance by Gap,” said Tiffany Hogan, senior analyst at Kantar Consulting. “But for the Gap, this seems like potentially a last significant effort to help the brand find its place in a market where it has lost relevance.”

She noted that in order for Gap to succeed, it needs to find the right mix of style and basics for its stores, while getting a better grasp of who its customer is.

Separately, Gap Inc. reported that Gap’s overall sales at stores opened at least year were down 1 per cent during the fiscal fourth quarter. By division, the Gap brand posted a 5 per cent drop, while that figure at Banana Republic was down 1 per cent. Old Navy posted sales that were unchanged from a year ago. But that was on top of a 9 per cent gain in the year-ago period.

Anne D’Innocenzio, The Associated Press

Like us on Facebook and follow us on Twitter

Just Posted

Suspicious fire in Alert Bay burns two homes, spreads to nearby bush

Police say underage suspects have been identified

VIDEO: North Island Bantam Eagles tie Dawson Creek Canucks in front of massive hometown crowd in Port Hardy

The Tier 3 Bantam Championships continued in style last night at the Don Cruickshank Memorial Arena.

Tri-Port Midget Wild finish season with gold medal performance

The other teams were no match for the Tri-Port girls.

Chief Administrative Officer officially appointed in Port McNeill

“Pete brings with him 17 years of municipal experience.”

Port Hardy RCMP’s 2018 fourth quarter crime stats are in

Port Hardy RCMP Staff Sgt. Wes Olsen spoke to Port Hardy council March 12.

VIDEO: Can you believe it? This B.C. hill pulls cars backwards up a slope

Sir Isaac Newton had clearly never been to this Vernon anomaly when he discovered gravity

Paramedic staff shortage at critical level: B.C. union

A number of units were out of service due to lack of staffing in Lower Mainland, union says

B.C. lottery winner being sued by Surrey co-workers

They claim he owes them $200,000 each, in a lawsuit filed in B.C. Supreme Court in Vancouver

BIG READ: The two sides of the Strait of Georgia roe herring fishery

The case for the Strait of Georgia roe herring fishery Comox fisherman,… Continue reading

Fraser Health under fire again for taxiing homeless man from Langley to Hope

Patient sent to Hope shelter because a spot in the man’s home community couldn’t be located

Dead sea lion discovered on Hornby Island shoreline

Reports indicate animal was shot in the head

Celina Caesar-Chavannes quits Liberal caucus, sits as independent MP

The Whitby, Ont., MP has been a vocal supporter of Jody Wilson-Raybould and Jane Philpott

Island SPCA overwhelmed by 45 cats taken from Comox Valley property

Many of the cats will be transferred to branches in Nanaimo and Victoria

Woman punched on the sidelines of B.C. soccer game

Both involved were watching the U21 game in West Vancouver from the sidelines when things got heated

Most Read