INTERNATIONAL - Gap Inc will separate its better-performing Old Navy brand and shutter about 230 stores of its struggling namesake apparel business, in one of its biggest restructuring efforts to energize sales, sending shares surging 25 percent on Thursday.
The company has struggled with contrasting performances of its brands. Old Navy has been a bright spot as its wide range of budget apparel made it more attractive to a broader base of customers, while its specialty Gap brand struggled in the face of competition from fast-fashion retailers and changing trends.
“It’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time,” Gap’s Chairman Robert Fisher said in a statement.
The 230 Gap specialty stores the company planned to close over the next two years, along with the 68 already shut, represents nearly half of its stores, the company said.
The company also said it would boost spending on marketing and developing new products for the Gap brand, but Chief Executive Officer Art Peck stopped short of saying that the brand was in a turnaround.