The Gap apparel conglomerate has ditched plans to spin off Old Navy into a separate company following the surprise departure of its CEO.
Gap’s board determined splitting off the budget brand would be too costly and complex to make sense, particularly in light of “softer business performance,” interim chief executive Robert Fisher said.
“We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner,” Fisher said in a Thursday statement, noting that preparations for the spin exposed inefficiencies and other areas where the company could improve.
Gap shares were up 2.1 percent at $19.01 in premarket trading as of 8:53 a.m. Friday following the news, which was announced after the market closed Thursday.
The company also announced Thursday that the president and CEO of its Gap brand, Neil Fiske, will leave his post. Banana Republic president and CEO Mark Breitbard will now oversee the firm’s portfolio of specialty brands, which includes Banana Republic, as well as Gap and Athleta.
Old Navy’s planned separation — which was first announced last February — was thrown into flux after Gap CEO Art Peck unexpectedly stepped down in November. Analysts at the time expected the shakeup would make it harder to carry out the spinoff of Gap’s best-selling brand.
Gap plans to pick a new CEO who will oversee its entire portfolio and corporate strategy, while Old Navy CEO Sonia Syngal will stay at the helm of her business, the company said.
Gap isn’t slated to release new earnings figures until next month. But the company said it expects comparable sales and net sales for the 2019 fiscal year to be at the “higher end” of previous guidance, saying comparable sales would be down in the mid-single digits, while net sales would be down in the low single digits.
With Post wires