February 28 (Reuters) – On Thursday, Gap Inc. said it would divide its old naval brand into a publicly traded company to focus on the struggling naming clothing business, delivering 18 percent of its shares.
Old Navy has been more successful in recent years than the Gap brand, as a wide range of budgets have attracted wider consumer interest.
"It is obvious that the Old Navy's business model and customers are increasingly different from our special brands," said Gap president Robert Fisher.
The company also said it was planning to close its 230 Gap store in the next two years.
Gap's total sales of the same revenue declined by 1% in the fourth quarter, which ended on February 2, compared to an average 0.3% increase in analysts, according to Refinitiv IBES.
Gap, Athleta, the Banana Republic and the remaining brands are part of an unnamed company. Separation is expected to be completed by 2020, Gap said.
Shares of the company increased by 17.7 per cent at more than $ 29.89. (Uday Sampath Report in Bengaluru; Edit Sriraj Kalluvila)