Old Navy is coming out from under the Gap umbrella. Gap Inc. today announced it is spinning off Old Navy into its own company. The Gap brand, Banana Republic, Intermix and athletic brands Athleta and Hill City will remain part of the same company under a new, yet-to-be-determined name.
Robert Fisher, Gap Inc.’s chairman of the board, said in a statement that the board’s decision stemmed from a realization that Old Navy’s customers and business have “increasingly diverged” from Gap Inc.’s other businesses.
“Each company now requires a different strategy to thrive moving forward,” Fisher said. “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.”
According to the statement, the hope is that as a stand-alone company, Old Navy will “be able to capitalize on its scale, broad customer awareness and unique positioning to extend its category leadership and deliver profitable growth as an independent company,” and that focusing on the Gap brand, Banana Republic, Intermix, Athleta and Hill City will drive profitability.
Old Navy has increasingly become a powerhouse for Gap Inc.—alone, it brings in $8 billion a year in revenue, nearly as much as the $9 billion the other five brands account for collectively.
Though the company is splitting, top leadership won’t change at either brand. Sonia Syngal, currently president and CEO of Old Navy, will remain in her position, and Gap Inc.’s chief executive, Art Peck, will lead the unnamed company that will include the five other brands. Both companies also will remain at their present headquarters in San Francisco, and both will be publicly traded.