The American clothing group Gap is going through a rough patch, and major measures are deemed necessary: Old Navy will be split into a separate listed company, while other brands will have to close several stores.
The aim of the spin-off is to ensure that both companies maximise their focus and flexibility and direct the necessary investments into their own unique needs. Old Navy's business model and customers have become too different from the other chains' and therefore a split in the company is necessary to allow each to follow a better strategy, chairman Robert Fisher told FashionUnited.
After the split, current Old Navy CEO Sonia Syngal will lead the label as a separate, listed company. The other brands (including Athleta, Banana Republic, Gap, Hill City and Intermix) will continue to follow a joint course in a new and as of yet unnamed company, led by Art Peck. That will be a diminished company however, as some 230 Gap stores will have to close within the next two years. Suffering from a stagnating turnover, Gap is being outperformed by its sibling brands. A growing share of turnover from online activities (up to 40 % in the near future) will make a lot of stores irrelevant, Gap thinks.