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

Brentwood Bay fruit stand plundered on first day of season

Leeanne and Jack Guthrie dismayed to find money and fruit stolen from roadside stand

Victoria woman accesses healing Burn Fund resources 45 years after injury

Stasi Manser was burned when she was five years old and now works as an adult burn survivor advocate

Fate of accused in Saanich couple’s 1987 killings in jury’s hands

William Talbott’s lawyer says DNA doesn’t prove murder

National HIV Testing Day comes to the West Shore

17.1 per cent increase in new HIV infections in Canada between 2014 and 2017

Local grocery store steps up to help resident after Saanich jams her stand

Pepper’s Foods will start selling jams previously sold through roadside stand

VIDEO: Killer whale steals fisherman’s catch off North Coast

Fishing duel results in eager orca snagging salmon in Prince Rupert

Greater Victoria wanted list for the week of June 25

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

POLL: Do you think the penalty should be increased for tossing a burning cigarette from a vehicle?

With grasslands and forests around Vancouver Island and across B.C. reaching tinder… Continue reading

PHOTOS: North Island home gutted in fire deemed ‘suspicious’

No injuries reported; firefighters prevented blaze from spreading

Child killed after being hit in driveway on Vancouver Island

The driver of the vehicle remained at the crash scene and is fully cooperating

Eating sandwiches, putting on makeup behind the wheel could land you a fine

RCMP say if you cause an accident while eating you could be penalized

Cat badly hurt in animal trap was likely stuck for days, B.C. owner says

Blu, a three-year-old house cat, suffered severe damage to his hind leg after being stuck in trap for days

Vancouver Island woman assaulted after confronting thief

RCMP warn residents to call for police assistance

40 cats surrendered in apparent hoarding at B.C. home

Officers found the cats living among piles of garbage and feces, suffering from fleas

Most Read