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gap
Inc.
GPS -0.21%
The Old Navy brand plans to open hundreds of stores as it prepares to separate from its parent company at a time when slower sales and online competitors are challenging many physical store chains.
Apparel retailer Gap said earlier this year that it would separate its growth-intensive budget brand from the rest of the company, creating two publicly traded companies.
For several years, Old Navy has surpassed its twin brands Gap and Banana Republic with lower prices and eye-catching marketing. Old Navy now exceeds sales of the original brand, accounting for nearly half of the $ 16.6 billion in Gap Inc. sales in 2018.
Old Navy, which has about 1,200 stores, announced Thursday that it wanted to reach 2,000 sites by opening stores, mostly in smaller, underserved markets. The company did not specify a schedule and said it was aiming for annual sales of $ 10 billion. Old Navy has opened 145 stores between 2016 and 2018, the company announced.
The Gap brand, meanwhile, has closed hundreds of stores in recent years, after expanding around the world, leaving it multiple stores in many markets. The company had approximately 3,800 stores worldwide.
Gap Inc. CEO
Art Peck
will continue to manage the parent company, which will include the Gap, Banana Republic, Athleta, Intermix brands and the new Hill City athletic brand. It will retain its Gap name and generate approximately $ 9 billion in annual revenue. CEO of Old Navy
Sonia Syngal
will lead the newly separated company, which generates annual sales of approximately $ 8 billion.
At the investor conference, Syngal said the new Old Navy stores will be slightly smaller than some current sites and that the retailer is also planning to expand its presence in Asia, where it had 17 stores as of 3 August.
Gap shares fell by less than 1% on Thursday morning. The company's shares have decreased by more than 30% in the last 12 months.
Gap said it expects separation expenses ranging from $ 400 to $ 450 million and separation-related costs ranging from $ 300 to $ 350 million between 2019 and 2021.
Here is the truth about the so-called "apocalypse of retail", it is more of a transformation. Lee Hawkins, editor-in-chief of WSJ News. Photo Illustration: Emily B. Hager / The Wall Street Journal
Write to Patrick Thomas at [email protected]
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