Old Navy and Gap are Separating into Two Different Companies – And One is Closing Stores
Hip2Save may earn a small commission via affiliate links in this post. Read our full disclosure policy here.
Old Navy and Gap are breaking up!
Gap Inc. just announced in a press release that they are planning to separate into two independent publicly traded companies by 2020: (1) Old Navy, as a standalone, and (2) a yet-to-be-named company (currently NewCo), which will consist of the iconic Gap brand, Athleta, Banana Republic, Intermix, and newly-launched Hill City.
Each brand has been going in separate ways over the years. The separation will allow each company to focus on its unique business needs. Old Navy, one of the fastest growing apparel brands in the U.S., has been successful in recent years, with a 3% increase in sales at stores in 2018. Gap’s sales, however, fell 5% last year.
“…it’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time, and each company now requires a different strategy to thrive moving forward. Recognizing that, we determined that pursuing a separation is the most compelling path forward for our brands – creating two separate companies with distinct financial profiles, tailored operating priorities, and unique capital allocation strategies, both well positioned to achieve their strategic goals and create significant value for our customers, employees and shareholders” -Robert Fisher, Gap Inc.’s Board Chairman
As part of the restructuring process, the company plans to close approximately 230 Gap specialty stores over the next two years, which includes mall-based stores that have seen declining traffic over the years. However, they plan to open more Old Navy stores, as well as a few Athleta locations under the NewCo brand.
Store closures mean great sales, so be sure to keep an eye out for possible Gap sales!