Gap has said that it is planning to split into two publicly independent public traded companies — Old Navy brand and the second a yet-to-be-named company, that will include its other brands like Banana Republic, Athleta, Intermix and Hill City.
The firm is also planning at closing about 230 Gap stores over the next two years.
Old Navy has been the strongest in the brand portfolio for the parent company accounting for nearly half of annual revenues.
“We think the best way for each company to grow and meet the evolving needs of our customers is to allow them to pursue tailored strategies separately,” Gap CEO Art Peck said. Peck will lead the newly formed company. Sonia Syngal, CEO of Old Navy, will keep running that company.
The move aims to allow Old Navy, which has grown to US $ 8 billion in annual sales since it opened its first store in 1994, to expand on its own. Old Navy’s ability to deliver stylistic apparel to price-conscious buyers has created a cult-like following. Over the last three years, it has continued to grow in sales and store count, often at the expense of Gap stores.
It was in November that Peck described Gap’s store count as unprofitable. As of the end of last quarter, there were 1,242 Gap stores worldwide. 758 of them were in North America.
