Gap Won’t Spin off Old Navy, Shares Flat

Gap Inc. (NYSE: GPS) barely budged Friday morning, on word the San Francisco-based company no longer intends to separate Old Navy into a standalone public company.

CEO Interim Robert Fisher said, "The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands.

"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 company now expects total company fiscal 2019 comparable sales and net sales both to 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 $1.70 - $1.75.

"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."

Gap also announced Thursday it will release its fourth quarter and fiscal 2019 earnings results via press release on Thursday, February 27.

Shares lost 11 cents to $18.50