“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” said Gap Inc. interim President and CEO Robert J. Fisher. “While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”

Moreover, the company and its brands are in a stronger place now, Fisher says. “The work we’ve done to prepare for the spin shone a bright light on operational inefficiencies and areas for improvement," he said. "We have learned a lot and intend 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.”

The board will appoint a CEO to oversee corporate strategy and the full brand portfolio. Neil Fiske, president and CEO of the Gap division, will be leaving the company. This follows the departure last November of Gap Inc. CEO Art Peck.

“The significant dis-synergies related to the transaction, as well as most of its separation costs, will be avoided," observed Christina Boni, a Moody’s vice president. "A larger diversified platform is instrumental to Gap Inc., not only in managing risk, but [also in] leveraging investments in technology and logistics.”

As a result of better than anticipated promotional levels over the holiday period, particularly at Old Navy, the company has adjusted its fiscal 2019 earnings-per-share guidance to be moderately above its previous projection of $1.70 to $1.75 per share. “We are working aggressively to stabilize and improve business results,” said Gap Inc. CFO Teri List-Stoll. “We are committed to sharpened strategic focus, tailored operating strategies, and operational discipline and accountability that can strengthen the health and profitability of our brands.”