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