Pedestrians walk past a GAP store in New York.
Scott Mlyn | CNBC
Gap Inc. has given up plans to split Old Navy into a separate public company, the company said in a press release on Thursday.
The apparel manufacturer also announced that Neil Fiske, president and CEO of the Gap brand, is leaving.
In the after-hours trading, the shares gained more than 9% in the news.
"The separation plan was based on our commitment to creating value from our brand icon portfolio," said Robert Fisher, interim president and CEO of Gap. "Although the goals of the separation continue to be relevant, our board of directors has concluded that the cost and complexity of splitting into two companies combined with weaker business performance have limited our ability to create reasonable value from the separation. "
"The work we did to prepare the spin has shed light on operational inefficiencies and areas for improvement," he added.
Gap's plans to dispose of the former Old Navy brand announced last February were questioned in late 2019 with the fall of Gap Inc.'s former CEO, Art Peck.
The San Francisco-based clothing retailer announced in November that Peck has resigned since 2015. Peck was temporarily replaced by Fisher, the son of Gap founders Donald and Doris Fisher.
Gap announced on Thursday that it plans to appoint a new CEO to oversee the entire brand portfolio, including Banana Republic, Athleta and Hill City.
With the sudden departure of Peck, analysts and investors began to doubt that an impending separation between Old Navy and Gap would occur – especially due to the recent underperformance at Old Navy. The hope with the split was that Old Navy could shine for itself without being affected by Gap's weaker namesake brand and Banana Republic.
Gap also informed Wall Street on Thursday about the key financial figures after the important Christmas season.
The retailer now requested that total sales in the same store and net sales in the 2019 financial year be in the upper range of the previously published forecasts – in the middle or lower single-digit range.
Gap said that "due to better than expected promotional levels during the vacation period," particularly at Old Navy, adjusted earnings per share for fiscal year 2019 are now "moderately above" a previously spent range of $ 1.70 to $ 1.75.
Gap is expected to report fourth quarter and full year earnings on February 27.In the event that you don't want to progress anymore