Gap Inc. announced that the company no longer intends to separate Old Navy into a standalone public company.
“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” said Robert Fisher, Gap Inc. interim president and CEO. “While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”
“The work we’ve done to prepare for the spin shone a bright light on operational inefficiencies and areas for improvement,” continued Fisher. “We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands, Old Navy and Athleta, and appropriately focuses on profitability for the Banana Republic and Gap brands. Our board is focused on supporting this work and appointing new leadership with the appropriate experience necessary to lead a portfolio of retail brands and to support our transformation efforts.”
The company’s board of directors intends to appoint a new CEO to oversee the full portfolio of brands and corporate strategy. As previously communicated, in the interim, four of the company’s senior leaders have been elevated and have taken on additional responsibilities reporting to Robert Fisher. Mark Breitbard, president and CEO, Banana Republic, will now lead Gap Inc.’s collection of specialty brands including Gap, Banana Republic, Athleta, Janie and Jack, Intermix, and Hill City; Sonia Syngal, president and CEO, Old Navy, will continue to lead the Old Navy business; Teri List-Stoll, executive vice president and chief financial officer, will lead corporate operations related to finance, supply chain, technology, and real estate; and Julie Gruber, executive vice president, global general counsel, corporate secretary and chief compliance officer, will lead corporate administrative functions including legal, corporate facilities and services, human resources and communications, loss prevention, sustainability, government affairs, and foundation.
Additionally, the company today announced that Neil Fiske, president and CEO of the Gap brand, will leave the company.
Fiscal Year 2019 Outlook
The company now expects total company fiscal 2019 comparable sales and net sales to both be at the higher end of its previous guidance range of down mid-single-digits and down low-single-digits, respectively. As a result of better than anticipated promotional levels over the holiday period, particularly at Old Navy, the company now expects its adjusted fiscal year 2019 earnings per share to be moderately above its previous guidance of $1.70 to $1.75.
“We are working aggressively to stabilize and improve business results,” said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc. “We are committed to sharpened strategic focus, tailored operating strategies and operational discipline and accountability that can strengthen the health and profitability of our brands.”
Photo courtesy Old Navy