Gap's stock rose after the company announced its intention to spin off its Old Navy brand into a separate public company.
Many well-known analysts welcomed this decision, as such a restructuring will improve the company's business. In recent years, the Old Navy brand has been successfully developing and has shown good sales dynamics, and Gap is in decline, which even led to the decision to close about 230 branded stores around the world. Separating a popular brand into a separate company will make the business more flexible and transparent, and it will be possible to respond more quickly to the latest market trends and constantly changing consumer tastes. In addition, this approach is more convenient in the heyday of e-commerce.
After splitting at Gap There will still be brands like Athleta, Banana Republic, Intermix and Hill City. CEO Arthur Peck will remain at the helm of the company. And Sonia Syngal, CEO of Old Navy, will continue to lead the brand, but as a separate company.
This is far from the first such case. So, last year, clothing manufacturer VF Corp. spun off the Lee and Wrangler brands into separate public companies. It can be assumed that other brands from the fashion world may take similar steps in the near future.