Apparel retailer mustering out of Gap
Gap Inc. is carving out Old Navy as an independent company, with the company’s shares spiking 20 percent after the opening bell Friday.
Gap is retaining Athleta, Banana Republic and two other brands, which combine for annual revenue of $9 billion. Gap stated the decision was driven by differing operating models for Old Navy compared to its other specialty brands.
Old Navy has $8 billion in annual sales, with the retailer planning to maintain its headquarters in San Francisco where Gap is based. Old Navy has southwestern Connecticut locations at the Danbury Fair and Westfield Trumbull malls, and across from the Connecticut Post Mall in Milford; as well as at Ridgeway Shopping Center in Stamford, Black Rock Shopping Center in Fairfield and Darinor Plaza in Norwalk.
“It’s less about the specifics of Gap brand than the divergence between the needs and opportunities in Old Navy and the needs of the specialty brands,” said Gap CEO Art Peck during a Thursday conference call. “I found myself, in the process of allocating capital ... for investment decisions, increasingly negotiating compromises in the portfolio that frankly were the ‘least-bad’ solution, versus highly optimized for the two different business models.”
Gap shares traded at $30.50 after the opening bell, their highest level since last August.
Alex.Soule@scni.com; 203-842-2545; @casoulman