Gap Inc. GPS, +3.44% is scheduled to report third-quarter earnings after the closing bell on Thursday, and there could be one bit of news to come from the announcement: the company could cancel the Old Navy spin off, Wells Fargo says. Gap already announced third-quarter same-store sales declines at Old Navy, Banana Republic, and the namesake chain of stores, and cut its full-year guidance. Moreover, Art Peck, the company's chief executive, is leaving the company.
"Keep in mind, when discussing the dynamics that would potentially take [the spinoff off] the table this year, management has stated that a material miss to Old Navy's plan this fiscal year would force them to at least rethink the strategy," Wells Fargo says. Not only will the low-price retailer miss, but the cost to separate the company would be about $700 million to $800 million, or about $2 per share, analysts note.
Source: News Formal (newsformal.com)
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