Old Navy Will No Longer Be Spun Off By Gap

Shares of Gap were on the rise this week after Wall Street learned that the retailer would no longer be spinning off its Old Navy division. The company had first said it would spin off the Old Navy brand was last February.

The company announced on Thursday that the plans for this move were cancelled and that its Gap brand president and CEO Neil Fiske would be leaving the company.

“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” Gap interim president and CEO Robert Fisher said in a statement.

“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,” he added.

Fisher, who is the son of Gap’s founders Donald and Doris Fisher, had replaced Art Peck last year when the former Gap CEO was ousted.

Gap said that it intends to appoint a new CEO to oversee its full portfolio of brands.

The company additionally revealed that it is now calling for total same-store sales and net sales in fiscal 2019 to fall on the high end of previously issued forecasts.

“As a result of better than anticipated promotional levels over the holiday period” Gap is now expecting its adjusted earnings per share in fiscal 2019 to be “moderately above” a previously issued range of $1.70 to $1.75.

The company will be reporting its fourth-quarter and full-year earnings on Feb. 27th.

Disclaimer: We have no position in Gap Inc. (NYSE: GPS) and have not been compensated for this article.