Gap Inc. tried to split into two companies — the market said no, and the CEO left

Gap Inc., the parent of Gap, Old Navy, Banana Republic and Athleta, announced in 2019 that it planned to split into two publicly traded companies: one for Old Navy (its value brand) and one for the remaining brands. The logic was that Old Navy's growth was being obscured by Gap's decline, and a separation would unlock value.

The plan was delayed by the pandemic and eventually abandoned in 2022. The market had already rendered its verdict: Gap Inc.'s stock continued to decline, Old Navy's growth was not enough to offset the weakness at the Gap brand, and the costs and complexity of a separation outweighed the theoretical benefits. CEO Sonia Syngal, who had championed the split, departed in 2022.

The deeper problem was not corporate structure but brand relevance. The Gap brand itself had been declining for years, losing its identity as the default American casual brand to competitors like Uniqlo, Zara and direct-to-consumer labels. No amount of corporate restructuring could fix a brand that had lost its reason to exist in the consumer's mind.