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

Chilliwack maternity ward closure narrowed to two weeks

Fraser Health says they’ve found a solution to an expected 13-week shortage of obstetricians

VIDEO: Chilliwack students and staff perform with Steven Point

Chilliwack secondary school students and staff perform song written by former Lieutenant Governor

RCMP believe Missing Hope teenager was headed to Chilliwack

Keely Reeze Loewen, 18, last in contact with a family member on June 13

Chilliwack trustees divided on Trans Mountain pipeline route near two schools

School district will pen letter to NEB to ask for re-routing away from schools to be considered

After 30 years, Agassiz’s Miss Marge set to retire from Variety Play

From 1989 to today, Miss Marge has taken generations of kids through the district play program

VIDEO: Rare white killer whale captured by drone near Campbell River

The transient orca has been named Tl’uk, a Coast Salish word that means ‘moon.’

B.C. oil tanker ban squeaks through final vote in Senate

Bill C-48 bars oil tankers from loading at ports on B.C’s north coast

Teens have privacy rights, doctor tells inquest into B.C. boy’s opioid death

Elliot Eurchuk died of a drug overdose. He was found unresponsive in his bedroom in April 2018

’When thunder roars, go indoors’: How to keep safe before lightning strikes

Each year, an estimated 10 deaths and as many as 164 injuries are lightning-related

B.C. rolls out online registration to speed up evacuee processing

Central Okanagan district tests province’s streamlined emergency management digital self-registration

VIDEO: After 73 years, siblings separated by adoption reunite in B.C

Donna Smith of Abbotsford and Clayton Myers of Williams Lake are glad they met each other

NHL Draft 2019: First-round mock selections

Hughes expected to go No. 1 overall; Canucks have 10th pick

New Westminster police seek video of fight between two teens

Police responded to a fight at Pier Park in the early hours of June 14

B.C.-born Carey Price brings young fan to tears at NHL Awards banquet

Anderson Whitehead first met his hockey idol after his mother died of cancer

Most Read