Thursday, Gap Inc. said that one of the companies will include Old Navy. The other, not yet mentioned, will include Gap, Banana Republic and other brands, including Athleta.
"It is clear that Old Navy's business model and customers have increasingly diverged from our specialty products," said Gaps chairman Robert Fisher in a statement. He said that each company "now requires a different strategy to thrive ahead."
Gap said Thursday that Sonia Syngal, CEO of Old Navy, will continue to run that brand. Art Peck, Gap's CEO, will lead the other company.
Separation is a story about two big different businesses: Old Navy has flourished in recent years, and sales in stores open at least a year increased 3% in 2018. A Jeffries analyst described the dealer as a "machine" this fall.
Meanwhile, Gap has fought – Sales fell 5% last year.
The G ap used to be the coolest brand in retail: the red mall on the hill of the 20th century, and its logo sweatshirts and turtlenecks won over everyone from teens to mothers and celebrities like Sharon Stone.
But the brand fell out of contact with Baby Boomers who grew up on the brand, and it failed to attract Millennials who run fashion trends today.
The company has been talking for a while about how to make Gap a healthy part of the business again. In November, Peck Gaps's store described as unprofitable. At the end of the last quarter, there were 1,242 Gap stores worldwide. 758 of them were in North America.
Thursday, the company said it will close 230 Gap stores over the next two years as part of the plan to "revitalize" the Gap brand. The closures will affect the "specialty" Gap stores, which include the mall.
Most of these stores will be in North America, said Peck analysts on a conversation Thursday. Finance director Teri Stoll added that the company focused on stores that did not deliver, were in the "wrong places" or were not "strategically suitable".
About 130 of these closures will happen this year, according to Gap. The company also plans to open Old Navy and Athleta locations. Athleta, which will be part of the new Gap company, is a women's athleisure chain that has been a success.
Gap believes it will save between $ 250 million and $ 300 million before tax over the next two years due to the closure plans, according to a securities deposit. It expects to complete the split of the companies by 2020.