Dive Brief:

• Gap Inc. Thursday announced that its plans to split off Old Navy into a separate company are off.
• "The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands," Robert Fisher, Gap Inc. interim president and CEO, said in a company press release. While the "objectives of the separation remain relevant," the board found that "the cost and complexity of splitting into two companies, combined with softer business performance," made it difficult to gain from a separation.
• Neil Fiske, who was tapped from surf brand Billabong to lead the Gap brand in 2018, will leave the company, the company also said.

Dive Insight:

Analysts had grown quite skeptical of the separation plan, devised by longtime CEO Art Peck last year, and frustrated by a lack of details surrounding it. Fisher took over when Peck left abruptly in November, and many observers expected the split to be cancelled then. But the board reiterated the plan the next day.

Moody's Investors Service Vice President Christina Boni on Thursday also noted the "cost and complexity of splitting the business in the face of weaker operating results." 

"The significant dis-synergies related to the transaction, as well as most of its separation costs will be avoided," she also said in emailed comments. "A larger diversified platform is instrumental to Gap, Inc. not only in managing risk, but leveraging investments in technology and logistics."

In his statement, Fisher also said that the company has nevertheless learned from the process, and intends "to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands, Old Navy and Athleta, and appropriately focuses on profitability for Banana Republic and Gap brand. Our board is focused on supporting this work and appointing new leadership with the appropriate experience necessary to lead a portfolio of retail brands and to support our transformation efforts."

The company continues to search for a new CEO. Meanwhile, in the interim, and with Fiske gone, four executives are taking on additional responsibilities, reporting to Fisher. Banana Republic chief Mark Breitbard will now lead Gap Inc.'s collection of specialty brands, including Gap, Banana Republic, Athleta, Janie and Jack, Intermix and Hill City; Old Navy chief Sonia Syngal will continue to lead that business; Gap inc. CFO Teri List-Stoll will lead corporate operations related to finance, supply chain, technology and real estate; and Julie Gruber, executive vice president, global general counsel, corporate secretary and chief compliance officer, will lead corporate administrative functions including legal, corporate facilities and services, human resources and communications, loss prevention, sustainability, government affairs and foundation.