Gap, Old Navy splitting; 230 stores to close

NEW YORK — Gap Inc. is splitting into two.

Gap said late Thursday, Feb. 28 that it's creating two independent publicly traded companies — low-priced Old Navy and a yet-to-be named company, which will consist of the iconic Gap brand, Athleta, Banana Republic, Intermix and Hill City.

Additionally, the company announced a plan to restructure the specialty fleet, including the closure of about 230 Gap specialty stores over the next 2 years.

The company estimated an annualized sales loss of approximately $625 million as a result of these store closures.

Officials with the San Francisco-based company said the spin-off will enable each company to focus on flexibility and pare down costs.

The moves, which followed a comprehensive board review, came with Old Navy thriving and Gap and Banana Republic struggling.

Gap officials said each company requires a different strategy to thrive.

Gap's current CEO, Art Peck, will hold the same position at the new company after the separation. Sonia Syngal, current CEO of Old Navy, will continue to lead the brand as a stand-alone company.