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

FortisBC inks deal to send LNG by container from Delta facility to China

The FortisBC shipments to China are to be delivered in 60 specialized shipping containers per week

Hazmat team called to Surrey recycling centre

Witness at scene said several workers reported affects including coughing, headaches and chest tightness

Olympic softball qualifier gets $150K boost from provincial government

2019 Americas Qualifier to be held in South Surrey from Aug. 25-Sept. 1

‘Kim’s Convenience’ keeps Surrey actor busy when not working as church pastor in Guildford

Award-nominated James Yi will again play shop owner at Surrey Arts Centre next winter

VIDEO: Wet weather kicks off Lower Mainland toad migration

Thousands of small western toads were making the trek from pond to woods

Gas price inquiry questions Trans Mountain capacity, company denies collusion

The first of up to four days of oral hearings in the inquiry continue in Vancouver

Serious police incident unfolding at Sts’ailes near Agassiz

Small reserve near Agassiz surrounded by police vehicles, helicopter, ERT

‘Benzos’ and fentanyl a deadly cocktail causing a growing concern on B.C. streets

Overdoses caused by benzodiazepines can’t be reversed with opioid-overdose antidote naloxone

RCMP release sketch of suspect in SFU assault, appeal to witnesses who helped woman

The RCMP want to talk to two women who helped the victim after she got to the parking lot

Will you be celebrating national hotdog day with any of these crazy flavours?

The popularity of hotdogs spans generations, cultures

Former home of accused Penticton shooter vandalized

Ex-wife of man who is accused of murdering four people had her house vandalized

Survivor of near-drowning in B.C. lake viewing life through new eyes

“If I died that day, the baby wouldn’t know his dad,” said 31-year-old Mariano Santander-Melo.

‘Beyond the call’: Teen in police custody gets birthday surprise by B.C. Mountie

Unusual celebration started when Staff Sgt. Paul Vadik went to visit the teen in his Coquitlam cell

Most Read