Latest News

Gap and Old Navy to Split, Create Two Separate Companies

Gap and Old Navy to Split, Create Two Separate Companies

By Simon Hung

A major shake-up is on the horizon for Gap Inc., as the clothing giant has announced plans to split into two independent companies.

The split will see Old Navy become its own standalone company, while a second currently-unnamed company will be created and consist of the other Gap Inc. subsidiaries including Athleta, Banana Republic, Gap, Hill City and Intermix. The restructuring is expected to be finalized in 2020.

In addition, the company plans to close 230 Gap-brand stores over the next two years, but it’s currently unknown how many closures will impact Canada. This brings the total number of Gap store closures to over 600 in the past four years, as the company closed 175 stores in 2015 and another 200 in 2017.

The news doesn’t come as a complete shock, as Old Navy has thrived in recent years, while sales at Gap and Banana Republic have sagged -- for reference, Old Navy reported approximately $8 billion USD in revenue for 2018, while all other Gap brands had a combined revenue of $9 billion USD over the same time.

In a statement, Gap Inc. Board Chairman Robert Fisher acknowledged the opposing directions as one of the factors behind the split, “It’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time and each company now requires a different strategy to thrive moving forward.”

For shoppers, the immediate impact should be minimal, as it'll be business-as-usual at Gap-brand stores until the deal is completed. However, there's a possibility that cross-brand shopping flexibility could be nixed in the future. For instance, shoppers could potentially lose the unified checkout experience online across the Gap brands and the ability to use Gap gift cards at Old Navy (or vice-versa). This is purely speculation as of now, as no official details have been released and shoppers will likely remain in the dark until the deal is finalized.



Source: Gap Inc.

10 Comments

    • Gift cards should be still be fine for both
    • Report Post
    • Short Term, I expect that the current issued GCs will work exactly as they have up until now... useable at Old Navy Stores, and any other Stores that belong to The Gap Inc Group of Retailers

      Long Term.,. Ya if Old Navy is going to be standalone from what is now known as The Gap Inc (and will in the future be known as something else under this Seperation Announcement) then I fully expect that there will distinct Gift Cards, websites, etc for BOTH of these companies

      Lol, the good news for those who use shopping portals (like AirMiles Shops.ca) is these 2 Companies will count as 2 Retailers whenever anyone is doing a shopping challenge
      😎
    • Report Post
    • The companies will be split, Gap will be downsized and possibly liquidated to prevent a large restructuring charge to the parent company to prevent weakness to the Old Navy Brand which has been paying the bills for corporate for the last few years. The other brands will be a distant memory soon.
    • Report Post
    • The prices for other brand are way higher than the quality of product they are selling. I think they are rightfully keeping Old Navy separate as I see more traffic to the Old Navy stores than their other expensive brands.
    • Report Post
    • I juist dont get why the quality dropped soooo badly for GAP- and their prices are high. Same with BR- especially when they increased their prices of their dress shirts and the quality and fit was bad.

      I dont get what GAP inc thinks they will achieve with this-don't forget that they have alot of synergies right now in terms of online (one website to shop all all three) they share warehouses, online orders can be shared between all 3, staff at call centres etc. What exactly will they achieve by splitting them into 2 idk. They could just try harder at BR and GAP to charge alittle little less and do better on quality.
    • Report Post
    • I love the Gap khakis lately ... not sure about much else.

      Oh and we really like Gap Kids / Baby (especially since Gymboree closed) but a lot of their retail prices are nuts. Only shop on sales, otherwise they aren't touching a dollar of mine.
    • Report Post
    • submalst wrote:
      Mar 2nd, 2019 9:03 pm
      I juist dont get why the quality dropped soooo badly for GAP- and their prices are high. Same with BR- especially when they increased their prices of their dress shirts and the quality and fit was bad.

      I dont get what GAP inc thinks they will achieve with this-don't forget that they have alot of synergies right now in terms of online (one website to shop all all three) they share warehouses, online orders can be shared between all 3, staff at call centres etc. What exactly will they achieve by splitting them into 2 idk. They could just try harder at BR and GAP to charge alittle little less and do better on quality.
      I think this move means that even internally they see Gap as a lost cause. Also to kill the marketing nightmare that is "BR/GAP comes from the same place as ON, just different tags."
      BR's sales numbers are almost flat, ON is rising and GAP is dropping. They split so that ON, by itself, can get a high valuation (no more dead weight dragging it behind). Which leaves dead weight concentrated in the new company (they're carving out the dead weight into a new company, not ON, which is telling).

      As for OP, you'll be fine. I'd be more worried about specific product lines you like at GAP/BR. If you like em get em soon, cuz they won't be there for long.
    • Report Post
    • dougrfdun wrote:
      Mar 3rd, 2019 12:07 am
      I think this move means that even internally they see Gap as a lost cause. Also to kill the marketing nightmare that is "BR/GAP comes from the same place as ON, just different tags."
      BR's sales numbers are almost flat, ON is rising and GAP is dropping. They split so that ON, by itself, can get a high valuation (no more dead weight dragging it behind). Which leaves dead weight concentrated in the new company (they're carving out the dead weight into a new company, not ON, which is telling).

      As for OP, you'll be fine. I'd be more worried about specific product lines you like at GAP/BR. If you like em get em soon, cuz they won't be there for long.
      Was already going to suggest they just put it all in 1 store. It isn't working separately.
    • Report Post