Gap announced an Old Navy spinoff, then paid $189 million to cancel it.
In 2019 Gap Inc. planned to spin off Old Navy. In January 2020 it canceled, booking $189 million in charges. In fiscal 2024 Old Navy's net sales were $8.4 billion, roughly 55% of the total.
Transcript
Gap Inc. had one brand doing more than half its business: Old Navy. Would you have spun it off?
In February 2019, Gap announced it would split Old Navy off into its own public company. In January 2020, Gap canceled the plan, citing the cost and complexity of splitting into two companies.
Gap booked $189 million in charges for a divorce that never happened.
In fiscal 2024, Old Navy's net sales were $8.4 billion, roughly 55% of the Gap Inc. total.
Keeping Old Navy was not obviously wrong: Gap's operating income swung from a $69 million loss in fiscal 2022 to $560 million in fiscal 2023. The costly part was announcing first and counting later. Price the exit first.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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