Last week, The Gap Inc. announced it was splitting into two companies: One, informally dubbed “NewCo,” will include Gap, Banana Republic, and smaller chains (Athleta, Intermix); the other, just Old Navy.
As part of the decision, Gap Inc. is closing 230 Gap stores over the next 2 years — and committing to opening more Old Navy locations.
Out with the old, in with the new
Founded in 1969, Gap “rode the mall boom” and experienced huge success through the ’90s. In 1994, the company launched Old Navy as a cheaper, “fast-fashion” alternative to their other offerings.
In recent years, Old Navy has usurped Gap: The chain had $8B in sales last year (compared to $9B for all of Gap Inc.’s other offerings combined), and has risen to be the #2 clothing brand in the US.
The move (which bumped Gap Inc. stock by as much as 25%) will give Old Navy autonomy from Gap Inc.’s other floundering brands — and hopefully, respite from a nationwide retail purge.
The retail-pocolyse is at high tide
This news came amid one of the worst weeks for retail in recent years. In a 48-hour span, nearly 500 retail store closures were announced, by Gap (230 stores), Foot Locker (165), Victoria’s Secret (53), and JCPenney (27). (Tesla is also closing “many” of its 378 locations.)
According to Business Insider, this is part of a wave of 4.5k expected store closures in 2019 — possibly as much as 200m square feet of space.