Gap Inc. — which continues to face big challenges — is making a major change.
The retailer announced today that it will split up into two publicly traded companies. The first will be Old Navy, while the second is a yet-to-be-named entity that will include Gap, Athleta, Banana Republic, Intermix and Hill City.
Gap expects the new company — which it’s referring to as “NewCo.” for now — to bring in about $9 billion in annual sales. Old Navy on its own currently draws around $8 billion in sales yearly.
“As we look ahead to 2019 and beyond, we know what we need to do to win, and combined with the separation we announced today, we will be well-positioned to leverage the power of our brands and the talented teams that lead them to accelerate the pace of change, improve execution and deliver profitable growth,” CEO and president Art Peck said in a statement.
Peck will be NewCo. CEO, while Old Navy CEO Sonia Syngal will continue to head up the standalone.
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Although Gap Inc. has struggled amid the shifting retail landscape, Old Navy has been a bright spot for the company, successfully luring budget-focused consumers in and away from competitors like JCPenney and T.J. Maxx. Old Navy reported 3 percent growth in sales on the 2018 fiscal year.
As part of its big reveal, the company also shared plans to close more than 200 of its Gap stores. The former mall staple, which has struggled in recent years, will focus on online sales. (Nearly 40 percent of its sales come from the web right now.)
Gap’s shares have fallen about 20 percent since this time last year. However, the announcement has pleased investors — with shares soaring up more than 17 percent to $29.80 in after-hours trading.
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