There was speculation that Gap would call off the separation after announcing that Art Peck would leave his CEO position.
Gap Inc. is committed to the spinoff of the Old Navy brands, according to Interim Chief Executive Robert Fisher, who gave three reasons it’s the best move for the struggling specialty retailer.
There was speculation that Gap GPS, +4.44% would call off the separation after announcing that Art Peck would leave his CEO position and reporting same-store sales declines at the company’s three core brands: the namesake, Old Navy and Banana Republic. Gap results were in line with diminished expectations, which sent shares up 4.3% in Friday trading, though shares have sunk more than 34% over the past year. The S&P 500 index SPX, +0.22% is up 17.3% for the past 12 months.In addition, Old Navy would be leaving China in early 2020 in order to focus on digital and invest in “underserved” North American markets.
“However, our ability to execute on our strategy as quickly and decisively as we would have liked will continue to be challenged.”Wells Fargo analysts said canceling the spinoff could be a good thing.“We remain skeptical that the improved transparency from the spin is worth the cost,” analysts led by Lorraine Hutchinson wrote. The cost has been estimated at between $700 million and $800 million.
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