Speculation is running rampant that one of the world's biggest retailers, Gap Inc. is throwing in the towel, weary from season after season of failed attempts to reinvent itself. The company's stock is rising despite dismal holiday season numbers, because the company has hired Goldman Sachs to explore "strategic alternatives" which is business code for "all or part of us is for sale". The family of founder Donald Fisher still controls the company, owning over 30% of the stock, and would make the final decision regarding sale or spin-off options, and there is much debate among the business and retail community regarding just how salable various parts of the company actually are. Banana Republic has been performing best among the three major divisions, and looks like the one most likely to be sold separately, while the Gap brand has been steadily slipping and Old Navy appears to be in a free fall. Increasing competition from chains like Abercrombie & Fitch, American Eagle and H&M have eroded their business. Former Gap Chief Millard "Mickey" Drexler has turned J. Crew around dramatically, and even Japan's UNIQLO has has proved to be a huge crowd pleaser with its giant Broadway flagship in Manhattan filled with merchandise that fans are describing as "like Gap, but better." The Fishers must surely see its U.S. expansion plans as another looming threat to their business. Whatever happens, any change will have an enormous impact on the retail industry as the company runs 3,000 stores and occupies some of the most desirable retail real estate around. We will be watching.
New Year, More Deals: Spin-off Speculation Surrounds Gap, Limited
By David Moin
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Vicki M. Young (WWD)
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