SAN FRANCISCO – (BUSINESS WIRE) –gap
Inc. (NYSE: GPS) announced today its intention to create two
Listed companies: Old Navy, a family leader
clothes, and a company yet to be named ("NewCo"), which will consist of
the iconic brands Gap, Athleta, Banana Republic, Intermix and Hill City.
Gap Inc. plans to effect the separation through a spin-off
generally exempt from tax for the shareholders of Gap Inc. for the United States.
for the purposes of federal income tax. The split will allow each company to
maximize focus and flexibility, align investments and incentives to meet
its unique needs and optimize its cost structure to deliver
"Following a thorough review by the board of directors of Gap Inc.,
It is clear that Old Navy's business model and its customers have
diverged more and more from our specialty brands over time and each
the company now needs a different strategy to thrive and go forward,
said Robert Fisher, Chairman of the Board of Gap Inc. "Recognizing that we
determined that the pursuit of a separation is the most convincing way
transmit for our brands – creating two distinct companies with
financial profiles, appropriate operating priorities and unique capital
allocation strategies, both well positioned to achieve their strategic objectives.
objectives and create significant value for our customers, our employees and
Art Peck, President and CEO of Gap Inc., added: "We have made
significant progress in implementing our balanced growth strategy and
invest in the capabilities needed to position our brands for growth:
expand the omnichannel customer experience, build our digital network
capabilities and improved operational efficiencies throughout society.
The announcement of today's benefits allows us to integrate these capabilities
within two autonomous companies, each with a more specific strategic focus
and customized operating structure. As a result, both companies will be
well positioned to capitalize on their respective opportunities and act
decisive in an evolving retail environment. "
NewCo, with annual sales of approximately $ 9 billion and a strong
balance sheet, will have a unique and differentiated portfolio, with
significant opportunity to create value. The company will be well
positioning to generate sustainable growth and improve profitability
taking advantage of its loyal and complementary clientele and a
an appropriately scaled operating platform with advanced digital solutions.
capabilities to provide distinct products and experiences. With reinforced
strategic and operational, it can produce better results at Gap,
Banana Republic and Intermix, while capitalizing on the dynamics of
B-Corp certified Athleta and Hill City recently launched. The program
announced today to restructure the Gap brand's specialty product fleet is a
important part of the plan to improve the profitability of this channel.
As an autonomous company, NewCo will also be better placed to
continue to evolve its leadership role in sustainable development and social development.
One of the fastest growing clothing brands in the United States with
annual turnover of approximately $ 8 billion, Old Navy will be able to
leverage its scale, reputation and unique positioning
extend its leadership in the category and generate profitable growth as a
independent company. Through this separation, Old Navy will have the
the flexibility, focus and control needed to improve customer access by:
by further implementing its strategic real estate strategy, by evolving its
omnichannel model and expanding its product categories to continue to
resonate successfully with value-oriented customers. Old Navy will be
well placed to invest in capabilities and initiatives that
continue to increase its market share.
Both companies will have experienced management teams, well suited to
direct these organizations on their distinct and defined paths.
Art Peck, current President and CEO of Gap Inc.
to occupy the same position at NewCo after separation. With more than one
decade of retail experience, Mr. Peck is well positioned to
lead NewCo in the future. In recent years he has led
significant improvements at Gap Inc. and a reinvigorated growth in
several specialized brands by strengthening the supply chain and by rotating
quickly to leverage technology and capitalize on new customer trends.
After the separation, Sonia Syngal, current president and chief
Senior executive of Old Navy, will continue to lead the brand as
autonomous company. Ms. Syngal – who has been running the Old Navy since 2016 – holds
proven experience of the transformation and conduct of the old navy
product innovations to the market, as well as a deep experience in supply
chain and manufacturing in the retail apparel industry and in other industries.
details of the transaction
Upon separation, the shareholders of Gap Inc. should receive a
the distribution of shares pro rata and therefore hold shares in NewCo and
Old Navy in equal shares. The transaction is currently aimed at
to be completed in 2020 and is subject to certain conditions, including
the final approval of the board of directors of Gap Inc., the receipt of a
the opinion of the lawyer and the filing and the effectiveness of a registration
statement with the US Securities and Exchange Commission. There can be
no assurance as to the ultimate moment or conditions of separation
or that the separation will be completed.
After separation, NewCo and Old Navy should be
sufficiently capitalized with enough cash to support planned spending
operating and investment plans.
NewCo will be based at the current headquarters of Gap Inc. and Old Navy
remains at its current headquarters, both located in San Francisco.
Morgan Stanley & Co. LLC acts as financial advisor and Wachtell,
Lipton, Rosen & Katz is the legal counsel of Gap Inc.
Conference Call and Fourth Quarter and Fiscal Year 2018 Results
Gap Inc. also announced today its fourth quarter and full year financial results.
Financial results for 2018 in a separate press release that can be found on
Gap Inc. website at www.gapinc.com.
Gap Inc. executives – including Art Peck, President and Chief Executive Officer of Gap Inc .;
Teri List-Stoll, Executive Vice President and Chief Financial Officer of Gap Inc. –
discuss this announcement as well as its financial results on its
conference call and webcast from approximately 2:00 am
pm at 3:00 pm Pacific time today.
You can access the conference call by calling 1-855-5000-GPS or
1-855-500-0477 (participant access code: 5575210). International appellants
can call 1-323-794-2078. The webcast can be viewed at www.gapinc.com.
For more information on separation, please visit the dedicated website.
Transaction website at www.gapinc.transactionannouncement.com.
This press release contains forward-looking statements in the "Security Guide".
port "of the law on the reform of the securities law of the
1995. All statements other than those purely historical are
forward-looking statements. Words such as "wait", "anticipate",
"Believe", "estimate", "intend", "plan", "plan", etc.
the terms also identify forward-looking statements. Looking to the future
declarations include statements concerning the following:
future sales, earnings, cash flow, results of operations, use of cash,
and other measures of financial performance or potential future projects,
strategies or transactions of the company or independent companies
following the proposed separation transaction, structure, benefits,
the capitalization and the timing of the completion of the separation transaction,
and the estimated costs associated with the separation transaction.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause the
the actual results of the company differ significantly from those of the
forward-looking statements. These factors include, without limitation,
the following risks, each of which could have an adverse effect on
financial position, results of operations and reputation of the company:
the risk that additional information may occur during the course of
close process or as a result of subsequent events that would require the
company to adjust its financial information; the risk that
the company or its franchisees will fail in the evaluation of the garment
changing consumer trends and preferences; the highly competitive nature
Company operations in the United States and internationally; the
risk of non-maintenance, improvement and protection of the company's brand
picture; the risk of not attracting and retaining key personnel, or
manage succession effectively; the risk that the company's investments
in customer buying initiatives, digital and omnichannel can not
provide the results anticipated by the company; the risk if the company is
unable to effectively manage inventory; the risk that the company will be
subject to data or other security breaches that may result in an increase
costs, violations of the law, significant legal and financial risks, and
a loss of confidence in the company's security measures; the risk that a
failure, updating or modification of company information
technological systems can disrupt its operations; the risk that trade
things could increase the cost or reduce the supply of clothing
available for the company; the risk of regulatory changes or
administrative landscape; the risks to the company's business, including
costs and supply chain associated with global and
manufacturing; the risk of changing global economic conditions or
consumption habits; the risks for the company's efforts to develop
including its ability to operate in areas where it
has less experience; risks to the reputation or operations of the company
associated with the importation of goods from foreign countries, including
the company's suppliers did not adhere to its code of conduct
Conduct; risk that the activities of the franchisees of the company are
stores is not directly under the control of the company and could harm the
value of its brands; the risk that the company or its franchisees
failing to identify, negotiate and secure a new store
the locations and renewal, modification or termination of
store locations effectively; currency risk
fluctuations; the risk of comparable sales and margins
fluctuations; risk of changing the credit profile of the company or
deteriorating market conditions may limit the market access of the company
capital markets; the risk of natural disasters, public health crises,
political crises, global negative climate patterns or other
catastrophic events; the risk of reduced revenues and cash flow
credit card agreement of the company relating to its own brand and
co-branded credit cards; the risk that the adoption of new accounts
the statements will have an impact on future results; the risk that the company
does not buy back all or part of the shares that he plans to buy
as part of its buyback program; the risk that the company does not
successfully defend various proceedings, lawsuits, disputes and
claims; risks associated with the impact, timing or conditions of the
separation transaction; the risks associated with the expected benefits
separation transaction costs, including the risk that the
the expected benefits of the separation transaction will not be realized
within the time period, totally or not at all, and the risk that
conditions of the separation transaction will not be fulfilled and / or
the separation operation will not be finalized on schedule
the planned period, under the conditions provided or not at all; the planned
qualification of the separation transaction as a tax-free transaction
for purposes of US federal income tax, including whether or not it is an IRS
decision will be sought or obtained; the risk that consents or
the approvals required as part of the separation transaction will be
not be received or obtained on time, at the latest
Expected terms or not at all; risks associated with the expected financing
transactions carried out as part of the separation transaction
and the risks related to debts incurred in connection with
separation transaction; the risk that the costs of dissynergy, the costs of
restructuring and other costs incurred in the context of
the separation transaction will exceed our estimates; and the impact of
the separation transaction on our business and the risk that the
separation transaction can be more difficult, time consuming or expensive
than expected, including the impact on our resources, our systems,
procedures and controls, the diversion of management's attention and the
impact on relationships with customers, suppliers, employees and others
commercial counterparties. There can be no assurance that society
the separation transaction will actually be completed in the manner described
or at all.
Additional information on factors that may lead to results
The differences can be found in the company's annual report on Form 10-K for the
year ended February 3, 2018, as well as the Company's subsequent fiscal years.
filings with the Securities and Exchange Commission.
These forward-looking statements are based on information from February
March 28, 2019. The company assumes no obligation to publicly update or revise
its forward-looking statements, even if experience or future changes
clearly that all projected results expressed or implied in
not to be realized.
About Gap Inc.
Gap Inc. is a leading global retailer offering apparel, accessories,
and personal care products for men, women and children under the age of
Marine, Gap, Banana Republic, Athleta, Intermix and Hill City brands.
The net business figure of fiscal year 2018 amounted to $ 16.6 billion. Gap Inc. products are
available for sale in more than 90 countries around the world via
corporate stores, franchise stores and e-commerce sites. For
more information, please visit www.gapinc.com.