In February, Peck announced plans to spin-off Gap's fast-growing Old Navy as a standalone company, saying the move would enable each company to maximize focus and flexibility.
But the future of that strategy is now up in the air.
Gap Inc GPS.N said on Friday it was sticking with plans to spin off its Old Navy brand into a separate company, as Wall Street analysts questioned its commitment to the project following the surprise exit of Chief Executive Officer Art Peck. Robert Fisher, the company's current nonexecutive chairman and son of Gap co-founders Don and Doris, will step in as president and CEO on an interim basis.
"On behalf of the entire Board, I want to thank Art for his many contributions to Gap Inc., spanning a almost 15-year career with the company", said Mr. Fisher.
Gap fired its chief executive officer late Thursday after his turnaround efforts failed to reignite sales growth, with disappointing third-quarter performance sending shares plummeting in late trading.
"Weaker results at the [Old Navy] business reduce the upside potential to the value of a standalone entity", Dana Telsey, analyst at Telsey Advisory Group, said in a note to clients Friday. "If it was clearly doing better than Gap and Banana [Republic], that makes a lot more sense".
"You gotta think this is going to be a hard sell" to investors, said David Swartz, an analyst for Morningstar Investment Service. The Fishers signed off on spinning out Old Navy before as a way for investors to realize the true value of a brand that has been dragged down by the struggles of Gap's other struggling properties.
Old Navy, which had anchored its parent company for years, was given to Sonia Syngal to shepherd. Although the retailer made several public missteps in recent years - such as making blazers with armholes too small for an average woman and jumping on the regrettable "normcore" bandwagon - many of its problem areas aren't even unique in today's hard retail environment: relying on routine 50% discounts and maintaining a major presence in declining American malls. It said its focus will be looking for strong candidates to fill the CEO seat and shoring up all its brands, which include the Gap and Banana Republic banners. It aims to hit $10 billion. He had planned to spin off Old Navy next year as "he strove to revitalize Gap with the addition of Athleta athleisure wear, provide more online offerings, and close unprofitable stores", Reuters said. "The sky's the limit".
Mr. Martin has served on the Board since 2002 including serving as the lead independent director from 2003 to 2015.
It added that there would be a regularly scheduled meeting of its board next week and that any additional details on the company's attitude to the spin-off would be provided in an earnings call on November 21.