Gap Inc GPS shares are soaring after announcing the company is splitting into two independent publicly traded companies.
Gap will split off into Old Navy, and a yet-to-be named company will consist of Gap brand, Athleta, Banana Republic, Intermix and Hill City.
The company said the spin-off will enable each company to maximize focus and flexibility, align investments and incentives to meet its unique business needs and optimize its cost structure to deliver profitable growth.
”Today's spin-off announcement enables us to embed those capabilities within two stand-alone companies, each with a sharpened strategic focus and tailored operating structure. As a result, both companies will be well positioned to capitalize on their respective opportunities and act decisively in an evolving retail environment," said Gap CEO Art Peck.
Gap also reported a fourth-quarter earnings beat, with adjusted earnings coming in at 71 cents per share, beating estimates by 2 cents. Sales came in at $4.623 billion, missing estimates by $77 million. The company will close 230 Gap stores over the next two years.
Gap's stock was up 18.6 percent in after-hours trading at $30.13 per share.
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