Gap’s sales fell 2.2 per cent in the third quarter. The apparel retailer is focused on aggressively addressing the operational issues that are hindering the performance of its brands. Gap will not sell its Old Navy apparels in China from early 2020 and instead will focus on its North America market to boost sales. The retailer will separate its better-performing Old Navy brand, giving investors hopes that the standalone company will be able to show better results than the Gap brand. Gap’s shares have fallen 37 per cent this year.

The Old Navy brand has been spun off as a standalone company. Gap, Athleta, Banana Republic, Intermix and Hill City will continue to be operated together as part of one company, which will retain the Gap name. The company’s management structure will be slimmed down in order to speed up decision making as well as a refreshed senior compensation plan, based around performance and accountability. It is hoped that the split will allow Old Navy, a consistent bright spot at Gap, to focus on executing its growth-oriented strategic initiatives, while the other company resulting from the separation will be able to channel its resources into revitalizing struggling brands such as its flagship Gap label and Banana Republic.