Gap Inc. has called off its 10-month-old decision to separate its discount chain Old Navy
Share to twitterGap has reversed course on its decision to spin off its discount chain Old Navy, a process that manyits discount chain Old Navy, but that doesn’t remove the tall order facing the specialty U.S. clothing retailer in its turnaround bid.
The spinoff work also has shed a “bright light on operational inefficiencies,” said Robert Fisher, Gap chairman and son of Gap founders who became the retailer’s interim president and chief executive after former CEO Art Peck, who engineered the spin-off plan, was ousted in November. Gap said it has “elevated” four of its interim leaders with additional responsibilities as it seeks a new CEO. Neil Fiske, chief of theWhile many on Wall Street applauded the move, the stock’s about-turn highlights investor skepticism on Gap. Gap shares, after surging more than 10% in after-hours trading following the news, fell 1% on Friday. Its stock has lost about three fifths of its value in the past five years as the retailer continued to lose market share.
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Gap Inc. Scraps Plan to Spin Off Old Navy Into Own Company [Updated]Robert Fisher, Gap Inc. interim president and chief executive officer, released a statement on the decision.
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Gap cancels plan to spin off Old Navy, citing 'cost and complexity' - Business InsiderInterim CEO Robert Fisher said the process of spinning off Old Navy shone a 'bright light on operational inefficiencies and areas for improvement.'
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Gap won't spin off its Old Navy brandGap ended plans to spin off its Old Navy brand Thursday, reversing a strategy announced less than a year ago.
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Gap cancels Old Navy spinoff, citing 'cost and complexity'Gap Inc. said late Thursday it no longer plans to spin off its Old Navy brand, saying the "cost and complexity" of the separation limited the creation of "appropriate value" from the split. The process of preparing the spinoff shone a light onto operational problems and areas for improvement, the company said. "We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands, Old Navy and Athleta, and appropriately focuses on profitability for Banana Republic and Gap brand," interim Chief Executive Robert Fisher said in a statement. Gap plans to appoint a new CEO overseeing all brands, the company said. In the same statement, Gap said it expects fiscal 2019 same-store sales and net sales to at the higher end of a previous guidance between down mid-single digits and down low-single digits. Thanks to better-than-expected promotional levels over the holiday period, particularly at Old Navy, Gap forecast adjusted fiscal year 2019 earnings per share to be "moderately above" a previous guidance between $1.70 and $1.75. Shares of Gap rose 9% in the extended session Thursday after ending the regular trading day up 3.9%.
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Gap says that it will no longer spin off Old NavyThe spin off was canceled after the retail company realized that the separation would not benefit its bottom line the way it had initially hoped.
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Gap scraps its plan to spin off Old NavyThe plan was formed under then-CEO Art Peck. But Old Navy’s performance has deteriorated, and Peck was removed as CEO late last year.
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