Further trimming its portfolio not long after selling off its newly acquired Janie and Jack children's label, Gap Inc. on Tuesday said it has a deal to sell its Intermix retailer to private equity firm Altamont Capital Partners.
Altamont will "acquire the entire Intermix business, including all store leases, e-commerce and assets," according to a company press release. Terms of the deal, including purchase price, were not disclosed.
Intermix first opened as a boutique in New York City in 1993, according to Gap's website. Gap Inc. acquired it in 2012 and now runs 31 locations and an online business.
While Intermix's general aesthetic fits with the rest of Gap Inc.'s portfolio, the upscale retailer, as a seller of third-party brand names, never quite made sense for the company.
In a March 9 note hailing Gap Inc.'s overall turnaround strategy (unveiled in October), MKM Partners Managing Director Roxanne Meyer called Intermix "a different model and thus a distraction" and applauded executives for saying they were reviewing their options for it.
The retailer was probably never a good performer, according to Wells Fargo analyst Ike Boruchow, who said in a client note Tuesday that the sale was expected. "As a reminder, [Gap Inc.] acquired Intermix back in 2012, but we believe the concept has lost money for the majority of its time within the ... portfolio," Boruchow said.
Scaling back the stable by unloading both Intermix and Janie and Jack (the latter acquired by Gap Inc. just two years ago) may be a smart play, but that still leaves much to be done. Athleta, thanks to its active and athleisure focus, has had a good year, but needs to grow if it's to contribute much to the company's bottom line. And it's unclear whether Gap, which has faltered for years now despite its brand strength and the casualization of America, can regain its place in fashion.
But with Old Navy apparently recovered after a weak 2019, Athleta's expansion to Canada, signs of life at Gap and the shedding of poor performers, the company may be on the right track. Old Navy and Athleta "can prove to be outperformers in both a pandemic and post-pandemic environment," with Gap, which in the fourth quarter saw its first positive comps in three years and has a Yeezy collab to look forward to, "adding gravy to thesis," Wells Fargo said.