Gap is splitting into two companies, one is Old Navy. The other unnamed company will comprise Gap, Banana Republic and the company’s other brands.

So Old Navy will become a standalone company. The aim is to showcase Old Navy and deemphasize its slumping namesake brand. Old Navy’s business model and customers had increasingly diverged from Gap’s other brands over time. Originally launched by Gap in 1994, Old Navy offers apparel that generally comes in at a lower price point than at Gap or Banana Republic.

Including all its chains, Gap has about 1,35,000 employees and 3,688 stores globally. Gap reported full-year comparable sales of positive three per cent at Old Navy versus a decline of five per cent at Gap and a gain of one per cent at Banana Republic. The company plans 230 more Gap store closures globally over the next two years as the company works to revitalize the Gap brand by re-engaging with customers and expanding its loyal customer base, leveraging the multigenerational, democratic appeal of the brand.

The move comes as the US retail sector faces stiffening pressure from online retailers as e-commerce eats up a greater share of retail sales. Conventional brick-and-mortar chains are also making costly investments to become omnichannel vendors to stay relevant.