Gap Inc., San Francisco, has announced it will spin off Old Navy as a separate company creating two independent, publicly traded companies — Old Navy; and a yet-to-be-named company that will comprise Gap, Athleta, Banana Republic, Intermix and Hill City.
The separation allows each company to increase its focus and flexibility, align investments and incentives and optimize its cost structure to ensure profitable growth.
The as-of-yet unnamed company earns approximately $9 billion in annual revenue. Old Navy boasts approximately $8 billion in annual revenue and is one of the fastest-growing apparel brands in the United States, according to Gap.
The separation will give Old Navy the flexibility, focus and control necessary to increase customer access and continue to grow its market share.
Art Peck, Gap Inc.’s current president and CEO will maintain the same position with the new company after the split. Sonia Syngal, president and CEO of Old Navy also will maintain her leadership role.
“Following a comprehensive review by the Gap Inc. board of directors, 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,” said Robert Fisher, Gap Inc.’s board chairman.