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Gap will split into two publicly traded companies, with Old Navy as a stand-alone; stock surges

By CNBC

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  • Old Navy has been such an outstanding division of Gap in its own right that it (finally?) gets a spinout play into becoming a standalone company.

    How outstanding, you ask?

    Gap Inc excluding Old Navy (Gap, Banana Republic, Intermix, Athleta and Hill City) makes $9 billion in revenue.

    Old Navy makes $8 billion in revenue by itself!!

  • Old Navy as a stand alone brand makes complete sense since it’s not closely related to Gap. The store overlap in the same mall is only 25%, compared with 75% for a Banana Republic and Gap. Old Navy has better fundamentals than Gap which has been declining for years with no end in sight.

  • A long overdue decision. The 24% after hours pop is a strong indicator of market sentiment and perceived value creation, though a lot could still happen between this announcement and the roadshow. I would not be shocked if M&A happens pre-spin. The arb traders must be having a field day with this one.

  • Classics strategy for trying to unlock value in your strongest single asset. Though seems like not that many companies recently have taken the step of creating a separate public company, right? I’m thinking of Google creating Alphabet but continuing to trade as one entity.

  • Maybe it’s just time to move to Banana Republic and Old Navy if the company was only making 18 million and 8 of that was Old Navy the rest was everything else.

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