Gap Inc. said Thursday it will split into two independent publicly traded companies — one of just Old Navy, and then a yet-to-be-named company, which will include its other brands like Banana Republic and Athleta.
Its shares surged more than 20 percent in after-hours trading on the news.
Following a review by Gap’s board of directors, “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,” Gap board Chairman Robert Fisher said.
Gap said the new company, which it’s currently referring to as “NewCo,” will make roughly $9 billion in annual sales. It will include the namesake Gap brand, Banana Republic, Intermix and athleisure lines Athleta and Hill City.
Old Navy, meanwhile, brings in about $8 billion in annual sales by itself. This brand has been the strongest of the Gap Inc. family, as Gap’s namesake label has struggled to grow sales of late.
Gap Inc.’s current CEO, Art Peck, will remain CEO of “NewCo,” Gap said. Sonia Syngal, the current president and CEO at Old Navy, will lead the new standalone Old Navy company.
