Gap could be pressured to spin off Athleta

Speculation is building that Gap is about to be hit by an activist campaign that forces it to spin off its fast-growing activewear banner, Athleta.

Why it matters: Athleta could fetch a hefty price if Gap decides to go through with such a move. Athleta's net sales in fiscal 2021 hit $1.45 billion.

Meanwhile, rumors around the apparel maker as either an activist, PE or split-up candidate are as perennial as skinny jeans. Talk of some kind of deal won't die no matter how many times fashion watchers declare it dead.

Driving the news: Activist Insight, an activist investor media and data firm, fanned the Athleta spin flames this week. Adrienne Yih, a retail analyst at Barclays, made similar comments.

• The stock jumped more than 8% yesterday to close at $14.46.

Flashback: Gap nixed a plan to split Old Navy into a separate company in 2020.

Between the lines: There is a strong argument for spinning off Athleta, given that its chief rival, Lululemon, has a $50 billion-plus market cap.

• "There's a philosophy that running a single brand and focusing on it is the smartest way to go and it allows you to be lean," noted David Silverman, a retail analyst at rating agency Fitch.
• The counterpoint is that owning several brands insulates the company from cyclical risk, something rating agencies prefer when a company is carrying a lot of debt, he said.

Reality check: Ultimately, whatever Gap does is up to members of the founding Fischer family, who control 42.8% of the stock, according to FactSet.