Separated from the struggling Gap brand, analysts and experts think Old Navy will thrive.
Gap Inc.’s decision to split Old Navy into its own company is being cheered by experts, analysts and investors who think this portfolio star will now be able to shine more brightly.
“The key motivation here isn’t about the Gap but rather to ensure that the success of Old Navy won’t continue to be overshadowed and weighed down by the sluggishness of Gap performance. By splitting the businesses out, Old Navy has the best opportunity to thrive and deliver value to shareholders without Gap dragging down combined performance.”On the earnings call, Gap Chief Executive Art Peck discussed the ways in which the different names under the Gap Inc. GPS, +16.
“Old Navy is one of the most attractive concepts in apparel retail,” wrote KeyBanc Capital Markets analysts led by Edward Yruma. “The banner has consistently had some of the strongest comps in our coverage and we think that its positioning of bringing value and fashion to a family consumer is an important differentiator.”Old Navy as a stand-alone company, which will continue to be led by Sonia Syngal, will have about $8 billion in annual revenue.
“In our view, there is more strategic rationale to spin out Athleta than Old Navy, but perhaps the timing isn’t quite right for Athleta,” Meyer wrote.
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