Why Is Gap Splitting Into Two Companies?
Earlier this year, Gap announced its plan to split itself into two independent publicly traded companies - an independent Old Navy, and a yet-to-be christened new company ("New Entity") that would include a smaller portfolio of niche brands in denim (Gap), upper middle-class fashion (Banana Republic), female athleisure (Athleta), and men's performance lifestyle (Hill City).Old Navy has been the strongest brand under Gap’s diversified brand portfolio, and the company plans to unlock significant value by spinning-off its star brand.The spin-off will also help the new company to focus on its struggling Gap Global brand by better allocating resources and developing tailored strategies for the brand.
Finally, Old Navy offers value-based products that are different from Gap's other brands. Separating the brand will help Old Navy target a different audience than Gap. This is likely to help grow the company's customer base at a faster rate going forward.
In this dashboard, Trefis analyzes what Old Navy could be worth as a standalone company.