Apparel retail giant Gap Inc. will spin off Old Navy into its own publicly traded company and shutter 230 Gap brand stores over the next two years.
At the start of 2018, the Gap brand had 725 stores worldwide. After the closures, which include 68 stores it closed this year, the chain will be down to roughly 427 stores or 41% of its total fleet.
“This represents closure of nearly half the fleet and there will be additional natural expirations and closures beyond 2020,” noted Teri List-Stoll, EVP and CFO, Gap Inc.
The company split is expected to be completed in 2020, by which time Gap, Inc. will divide into Old Navy and a yet-to-be named company, which will consist of Gap, Athleta, Banana Republic, Intermix and Hill City.
“It has become increasingly clear that our balanced growth strategy, while successful in building necessary capabilities in areas like supply chain and digital capability that are important to a scaled operating platform, no longer effectively supports the diverging needs of Old Navy versus our traditional specialty brands,” said Teri List-Stoll. “Now is the right time for us to take the next step on our journey to both ensure the competitiveness of our brands and to deliver shareholder value.”
According to List-Stoll, the retailer expects the Gap brand’s online channel to evolve to more than 40% of its business as it restructures.
“We believe Gap brand will be well-positioned to compete effectively with an omni model that offers locations, formats and experiences that serve our customers' shifting shopping patterns,” said List-Stoll.