REUTERS: Gap Inc shares surged 25 percent on Friday as a number of Wall Street analysts lauded the company's decision to separate its better-performing Old Navy brand.
"Separating Old Navy to a standalone company is what we have argued for over the past few years. Doing so allows the market to properly value Old Navy for its high margins and strong cash flows," Jefferies analyst Randal Konik said. "Santa didn't bring the sales but brought Old Navy spin instead," RBC's analyst Kate Fitzsimons said.
The company also said it would close hundreds of underperforming Gap stores in the next two years and would increase investments in its online business as they try to adapt to a more modern retail environment.It already shut its massive flagship store on Fifth Avenue in New York earlier this year.
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