In a bold move that caught everyone by surprise, the retailer announced its intentions to split away from the parent company GAP, and stand independently as a differentiated brand as well as a publicly traded company.
Not only that, the retailer announced its intentions to open around 800 new stores immediately following their split from GAP; this move will nearly double their current locations, pushing the total number of shops - most off which are outside shopping malls - to almost 2,000 locations (although nearly 200 of the existing GAP shops will close in the process).
This is a very surprising move, especially at a time when store closing rates across the USA are higher than ever. The split between GAP and Old Navy will however be friendly, and the parent company (Gap, Inc) will retain its diverse portfolio that includes companies like Athleta and Banana Republic - although it could change its current name.
According to Sonia Syngal, who is currently CEO at Old Navy, this move intends to differentiate Old Navy and bring it back to its origins. The company was founded in California in 1994 with ambitious plans to create a powerful identity that bridges the gap between tradition and innovation in the fashion and accessories industries. This vision will once again become the main focus one Old Navy becomes a separately traded company.
The spin off will begin in 2020, and in a first phase, over 200 GAP stores will close (typically in locations where there is currently a GAP store alongside Old Navy. From there, the plan is to create around 80 new stores each year until the goal of 800 new stores has been accomplished. In case this plan is successfully accomplished, Old Navy will likely become the most widespread clothing store in the USA.
According to the Old Navy representatives, the focus will be directed towards small markets (of under 200,000 people) that currently are underserved and show good potential for sales. With its unwavering focus on providing value to American families, maybe the popular retailer could manage to turn the decline of brick-and-mortar stores to its advantage, with these ambitious plans for expansion.
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