Old Navy in addition to also The Gap Are Separating

Gap Inc. plans to split into two separate publicly traded companies — Old Navy in addition to also a brand-new, yet-to-be-named company comprised of the Gap brand, Athleta, Banana Republic, Intermix, in addition to also Hill City, the company announced Thursday.

“Following a comprehensive review by the Gap Inc. Board of Directors, in which’s clear in which Old Navy’s business style in addition to also customers have increasingly diverged coming from our specialty brands over time, in addition to also each company currently requires a different strategy to thrive moving forward,” Robert Fisher, chair of Gap Inc., said in a statement. “Recognizing in which, we determined in which pursuing a separation is usually the most compelling path forward for our brands.”

The brand-new company will be led by Gap Inc.’s current president in addition to also CEO, Art Peck. Meanwhile, Sonia Syngal, the current president in addition to also CEO of Old Navy, will lead the brand as a stand-alone company.

Gap Inc. said the spinoff “will enable each company to maximize focus in addition to also flexibility, align investments in addition to also incentives to meet its unique business needs, in addition to also optimize its cost structure to deliver profitable growth.”

The announcement comes the same day Gap Inc. announced in which plans to shutter 230 of its namesake brand’s stores over the next two years as in which restructures its business. The brand has slowly lost relevance as consumers lean toward lower-priced apparel available at retail stores like Old Navy in addition to also TJ Maxx.

Old Navy has continued to be a bright spot on Gap Inc.’s financial reports. Gap’s global sales fell 5% during fiscal year 2018 compared to a 1% decrease in 2017. However, Old Navy’s sales increased 3% during the same time versus a 6% increase in 2017, the company reported on Thursday.

The official separation is usually supposed to be completed in 2020.