The Gap ($GPS) is shrinking its business, closing underperforming stores and spinning out its Old Navy brand. 

That means cleaving off the brand responsible for roughly half its revenue. Gap stock spiked on the March announcement it would spin out Old Navy (which it has yet to complete), but the stock regained its downward momentum afterwards and has lost about 14% of its share value so far in 2019. And although Gap is losing a key brand in Old Navy, the asset it has been developing for more than a decade in Athleta has established itself as a prominent player in athletic-wear. 

After making the Athleta acquisition in September 2008 for around $150 million, Gap's ability to develop the brand has turned Athleta into one of the dominant stores in its portfolio, pitting it against Lululemon ($LULU) in a growing and competitive market. When the company reports earnings May 30, a group of analysts tracked by Zacks Investment Research are expecting an aggregated EPS of $0.31 per share. And Athleta may have a bigger impact on Gap's performance going forward - especially once Old Navy is a stand-alone organization. 

Athleta's Social Strength

In July 2018, Twitter ($TWTR) conducted a massive purge of fake accounts, bots and duplicates - and there was only one Gap brand that made it through the process unscathed. Athleta - the top chart - has more followers today than it did pre-purge. That stands in contrast to every other Gap brand - Intermix, Banana Republic, and, Gap, which is the second chart presented above. 

Here We Are!

Over the last 12 months, Athleta's Facebook ($FB) Were Here Count has grown 14.6% - this represents how many check-ins, mobile device shares, and photo-location tags are made at a business from a Facebook user's phone. This is in a contrast to Gap - not shown - which is up just 6.6% for the same metric, over the same timeframe. 

Still Growing

Based on Gap's federal filings, there are just two brands that it has continued to grow in recent years - Old Navy, and, of course, Athleta. From late 2015 until early March 2019, Athleta grew its stores count from 121 to 162 - although this is still a fraction of the size of Old Navy's footprint. When Old Navy is finally formally separated from Gap, look for the trend in Athleta store openings to climb further. 

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