Gap Inc. (NYSE: GPS) today announced that the company no longer intends to separate Old Navy into a standalone public company.
“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” said Robert Fisher, Gap Inc. interim president and chief executive officer. “While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”
“The work we’ve done to prepare for the spin shone a bright light on operational inefficiencies and areas for improvement,” continued Fisher. “We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands, Old Navy and Athleta, and appropriately focuses on profitability for Banana Republic and Gap brand. Our board is focused on supporting this work and appointing new leadership with the appropriate experience necessary to lead a portfolio of retail brands and to support our transformation efforts.”
The company’s board of directors intends to appoint a new CEO to oversee the full portfolio of brands and corporate strategy. As previously communicated, in the interim, four of the company’s senior leaders have been elevated and have taken on additional responsibilities reporting to Mr. Fisher. Mark Breitbard, President and CEO, Banana Republic, will now lead Gap Inc.’s collection of specialty brands, including Gap, Banana Republic, Athleta, Janie and Jack, Intermix and Hill City; Sonia Syngal, president and CEO, Old Navy, will continue to lead the Old Navy business; Teri List-Stoll, executive vice president and chief financial officer, will lead corporate operations related to finance, supply chain, technology and real estate; and Julie Gruber, executive vice president, global general counsel, corporate secretary and chief compliance officer, will lead corporate administrative functions including legal, corporate facilities and services, human resources and communications, loss prevention, sustainability, government affairs and foundation.
Additionally, the company today announced that Neil Fiske, president and CEO of Gap brand, will leave the company.
Fiscal Year 2019 Outlook
The company now expects total company fiscal 2019 comparable sales and net sales to both be at the higher end of its previous guidance range of down mid-single digits and down low-single digits, respectively. As a result of better than anticipated promotional levels over the holiday period, particularly at Old Navy, the company now expects its adjusted fiscal year 2019 earnings per share to be moderately above its previous guidance of USD 1.70 – USD 1.75.
“We are working aggressively to stabilize and improve business results,” said Teri List-Stoll, executive vice president and chief financial officer, Gap Inc. “We are committed to sharpened strategic focus, tailored operating strategies and operational discipline and accountability that can strengthen the health and profitability of our brands.”
Fourth Quarter and Fiscal 2019 Earnings
Gap Inc. will release its fourth quarter and fiscal 2019 earnings results via press release on February 27, 2020 at 1:15 p.m. Pacific Time.
This press release contains forward-looking statements within the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” and similar expressions also identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding comparable sales, net sales and earnings per share for fiscal year 2019.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause the company’s actual results to differ materially from those in the forward-looking statements. Additional information regarding factors that could cause results to differ can be found in the company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019, as well as the company’s subsequent filings with the Securities and Exchange Commission.
These forward-looking statements are based on information as of January 16, 2020. The company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realised.
Gap Inc. is a leading global retailer offering clothing, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, Athleta, Intermix, Janie and Jack, and Hill City brands. Fiscal year 2018 net sales were USD 16.6 billion. Gap Inc. products are available for purchase in more than 90 countries worldwide through company-operated stores, franchise stores, and e-commerce sites.