Gap Inc. Nixes Plan To Spin Off Old Navy
On the latest episode of Today In Five:
Gap Inc. announced it no longer plans to spin off Old Navy brand following softer business performance and abrupt departure of two top company executives.
- According to a December 2019 survey by NPR and Edison Research, smart speaker ownership grew to 24% of the U.S. adult population, about 60 million people, from 21% a year earlier. The study also found that smart speaker households contain an average of 2.6 devices, up from 2.3 the year before. The number of smart speakers in U.S. households climbed 32% to 157 million in 2019. With the growing number of consumers with smart speakers, the new technology presents an opportunity for marketers, while speaker sales begin to surge.
- Google’s parent company, Alphabet, has hit $1 trillion in market capitalization, making it the fourth U.S. company to hit the milestone. Apple was the first to hit the market cap in 2018, then Microsoft and Amazon followed. Apple and Microsoft are still valued at more than a trillion dollars while Amazon has since fallen below the mark. With a roughly $620 billion valuation, Facebook appears to be the next likely trillion-dollar tech contender.
- NBCUniversal is planning an expansive marketing rollout for its streaming service, Peacock. According to a person familiar with the matter, NBCUniversal’s spending on its Peacock campaign will likely exceed $300 million in its first year. Launch sponsors, which include Unilever and Target, have agreed to promote the streaming service on their websites, in their own media, and in stores, the person said. Sponsors have also committed hundreds of millions of advertising dollars long-term to Peacock. The streaming service will be available on April 15th for select Comcast customers and July 15th for everyone.
Gap Inc. Reverses Decision To Split From Old Navy Brand
Gap Inc. announced that its plans to split off Old Navy into a separate company are off. Analysts had grown skeptical of the separation plan devised by longtime CEO, Art Peck, last year. Robert Fisher took over as interim president and CEO after Peck’s abrupt departure in November and many observers expected the split to be canceled then. But the board reiterated the plan the next day.
In a company press release, Fisher stated, “The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands.” He also noted that 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 benefit from a separation.
In his statement, Fisher also said the company has 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.” Alongside the announcement of the nixed plans, the company revealed that Neil Fiske, president and CEO of the Gap brand, is departing.