Old Navy Has Huge Post-Spinoff Growth Plans
Earlier this year, Gap (NYSE: GPS) announced that it would spin off its largest brand, Old Navy, as a separate public company. In a nutshell, the rationale was that the high-margin, fast-growing Old Navy brand was being held back by the weaker Gap and Banana Republic brands, particularly from a valuation standpoint.
Last week, Gap provided more details on its plan to split into two companies. The presentation included some aggressive growth targets for Old Navy. If the brand can live up to its growth potential, it could be worth more than the current market cap of the entire conglomerate. However, Old Navy first needs to break out of its recent sales slump.
Old Navy has been Gap's main growth engine recently, adding hundreds of millions of dollars to its top line in each of the past two fiscal years. Comparable store sales grew 3% in fiscal 2018, on top of a strong 6% gain in fiscal 2017.
Source Fool.com
