Gap will abandon its plan to spin off Old Navy into a separate public company.
“The work we’ve done to prepare for the spin shone a bright light on operational inefficiencies and areas for improvement,” said Robert Fisher, the company’s interim CEO, in a statement.
In early November, Gap dismissed CEO Art Peck. His departure called into question the company’s spinoff strategy. Gap‘s board concluded that the cost and complexity of splitting into two companies—combined with “softer business performance”—would instead limit the retail operator’s ability to create shareholder value.
“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,” Fisher said.
The retail conglomerate also announced that Neil Fiske, the CEO of the Gap retail banner, will leave the company. In addition, Gap, the parent of Banana Republic, Athleta and Old Navy, plans to name a new CEO to oversee the company and its portfolio of brands.
Several of the company’s senior executives have taken on additional responsibilities: Banana Republic CEO Mark Breitbard is also leading the Gap, Athleta, Janie and Jack, Intermix and Hill City brands, Gap CFO Teri List-Stoll leads corporate operations related to finance, supply chain, technology and real estate, and global general counsel and chief compliance officer Julie Gruber leads corporate administrative functions including legal, corporate facilities and services, human resources and communications, loss prevention, sustainability, government affairs and foundation.
Gap’s shares rose in value by more than 4% in after-hours trading to $19.36 per.