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Old Navy and Gap are Separating into Two Different Companies – And One is Closing Stores

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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.

Old Navy Girl Jeans

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

GAP store closing sign

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!


Up next: Will Victoria’s Secret be going out of business soon?


Mary is a senior copywriter with 9+ years in frugal tips & deals. She has a Bachelors in Human Resources Interdisciplinary Studies. Connect with Mary on LinkedIn


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Comments 28

  1. Emily

    I hate to hear this. I love gap, in particular the gap outlet stores! Great deals and great quality. Old Navy is ok but seems to wear out quicker to me and their clothes don’t always fit right.

  2. Meghan

    I really liked being able to use my Old Navy credit card at the Gap Outlet. Bummed. 😭

    • Tomoko

      Me too

  3. Steph

    The price vs quality for Gap is overpriced in my opinion. And this year so many of their sweaters shrunk (even following correct washing instructions) it was extremely frustrating my kids were wearing things 1x then they became belly shirts.

    • kimberleyjelinek

      I totally agree , but I also love both Gsp & Old Navy ! I used to work for ON , love their prices , but not a lot of duplicate sizes ( like they had when I worked there !

  4. Katie

    Bummer! Old Navy quality is so poor and I can hardly get clothing to last past one child. Gap however is so much better! Styles better at Gap as well.

    • Anne

      I 100% disagree! I would say that 50% of my wardrobe as well as my 5 kids’ wardrobes come from there and I am always very satisfied with the quality, not to mention the pricing. I also shop at Kohl’s and J.Crew and my Old Navy clothing is comparable in quality to the stuff I have from those two stores. Almost all of my jeans come from Old Navy and they are very, very good quality. Both of our teenage daughters get a ton of their clothes from Old Navy, as well, and they have held up extremely well. I have Old Navy clothing from three kids ago that our youngest is now wearing! Gap is overpriced and out of touch with today’s market which is why they are closing stores.

      • Jo

        Ditto!!!

  5. shelly

    Anyone know what happens to our Gap or Old Navy credit cards? 😥

    • Holly

      I’m wondering the same thing!

  6. OregonLexy

    Check out your local Payless mine is 30/50% off

  7. Nels

    I just looked up intermix – I thought I was seeing doubles when I saw their prices.

  8. Angela

    So bummed! Gap has the best quality clothing and lasts much longer than Old Navy!

  9. BrBa

    I love GAP jeans, jackets, and their 100% cotton items- specifically their nightgowns, bras, t-shirts and lounge/yoga pants. 100% cotton clothing is extremely hard to find these days and living in TX, it’s a must 8 months out of the year! But I agree, GAP is overpriced generally so I only shop there when it’s 40% off. Old Navy is just flat-out terrible quality for the price.

  10. Nita

    You have to know what to get at Old Navy..Their athletics, winter coats, denim jackets, certain jeans, their blazers and 100% cotton items like button downs and dress pants, and t-shirts are good quality for the prices. The Gap outlets are also the best I find for prices as well, win win. Hopefully they bounce back.

    • Anne

      Agree!! Old Navy is not the place for buying shoes, as someone complained about the quality of . With their shoes, you get what you pay for there. BUT, their jeans are fantastic as well as their athletic wear, dress pants, dress shirts and dresses! We also love their cardigans for school. And with their price points, it’s no surprise that their sales are up and gap sales are down!!

      • CC

        I used to love their foam sandals-I’m glad I stocked up before they were discontinued (and without warning)- still have a few pairs left from 10 years ago (I used to love having a pair in every color so I had a TON)- they’re comfortable and light weight… then they switched to Haviana style sandals (pretty sure same exact thing as they were similar in weight and fit and made in brazil)… then they switched to really crappy ones- although I haven’t been there in yearsx I mainly went for the sandals

  11. Gina

    I just used up my Payless shoesource gift cards today. Anyone know how this impacts old navy/gap gift cards? I feel like I can’t keep up with all the closures and restructuring!

  12. Mella

    Ugh old navy is terrible quality. Worse in recent years. All my T shirts from there became sleep shirts, jeans all faded, kids shoes have holes in a few months. Stopped shopping there.

    • Anne

      My rockstar high-waisted skinny jeans from Old Navy are my absolute favorite pair of jeans, hands down. I have them in black, a dark blue rinse color and a lighter blue distressed pair. I have a distressed pair that I bought in the fall of 2017 that I am still wearing and they have held up wonderfully! All of them have, actually. It’s one of the only places I will get my jeans from and I am a clothing snob, lol!

      • Jo

        Those are the only jeans my 16-year-old daughter likes, too.

      • Beverly

        I’m with you! Their jeans fit me really well , so I’m glad they’re sticking around. I have a couple of ON jeans that have been going strong for nearly a decade!

    • Dawn

      Agree Mella, poor quality – you get what you pay for at ON.

  13. Laurie Villotta

    If this is where retail is going there will not be any malls open in near future. The quality of clothes has gotten so bad. Prices are high. Hello TJ Maxx and Marshalls. High quality for not a lot. I think with the majority of people also thay are doing everything online. At least I am. This is the thing when I shop online I do not overspend. I have quit shopping except for groceries and I am sure I will also stop that soon now that I can pull into Kroger and they bring them to my car. I am saving a lot. I often wonder how on earth so many people can afford or not afford to always be buying things from all these posts. Our world is way too wrapped up in materialistic things.

    • CC

      Part of the problem is the tax loophole of malls- creating a tax shelter for people to hide their money- bc of the loophole, even if a mall flops, there’s no way for the owner to lose money…. of course this led to mega-builds of malls in areas that allow it (where I am they’re very conservative and so we struggle with growing pains of the cities requiring many studies where it’s obvious more stores would do well or are necessary to support the needs of the community- we also had problems in the past drawing stores as we aren’t a mega city like LA… I cannot fathom how busy our mall is every day! Any afternoon or any time on the weekend I’ve gone there it’s like Black Friday level in most of the parking lots) and the mall owners convince stores to fill the malls…. then the stores in the areas with the mall booms start to struggle and bring down all the other stores… and of course there’s the issue of standalone stores over building- in some cities I’ve been to, there is the same chain store within 10 minutes walking of another store from the same chain.. of course the other issue is online shopping where many prefer to shop online (I prefer in store – especially for clothes to try them on and produce to pick the best ones)… but I agree there is too much materialism, but I guess the only upside of all the crazy materialism is economic- more jobs

    • Ok

      I love tjmaxx and Marshall’s. It’s hard for me to justify buying full price now when they have quality stuff. I also shop online a lot because it’s convenient. The trend of malls closing has been going on for some years now. They are just not that popular anymore like they once were. Retail trends are changing.

  14. Tiffany_3d

    I invested in Gap stock only due to the old navy boom over the past 5 years. I wonder if I should sell as my current will probably go to gap and old navy will be having it’s own pretty quick. Make sure we look out for their IPO!!!

    I have old navy clothes from 10 years ago I still wear. Also my youngest is wearing stuff from my oldest of the 3 Kids. I have sent so many friends to old navy for clothes and promised they would love it as most of them had never shopped there. From infant socks to adult corporate attire, it’s my go to!

    • MIKA

      I was thinking the same thing. I will definitely be looking forward to their IPO.

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