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  • Gap Inc. on Thursday announced it was splitting Old Navy off into its own publicly traded company.
  • The Gap brand has recently struggled to keep up with Old Navy, which has become the most successful of the Gap Inc. brands.
  • In late 2018 we shopped at both Old Navy and Gap.
  • We discovered why Old Navy had been carrying Gap Inc. before the brand spun off as its own company.

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Old Navy is splitting from the Gap.

Gap Inc. on Thursday announced it would be splitting the retail company into two publicly traded companies — Old Navy and a yet-to-be-named company that will consist of the Gap brand, Athleta, Banana Republic, Intermix, and Hill City.

Recently, Old Navy has been spearheading Gap Inc.’s growth as its namesake brand struggles to keep up.

Gap discounts nearly everything in the store, threatening margins, and ultimately making shoppers less likely to pay full price. It also offers a lot of the same styles and quality clothing as Old Navy, but for a higher price.

“We are clearly not satisfied with the performance of Gap brand. We know this iconic brand is important to customers, and we are committed to taking the bold and necessary steps to ensure that it delivers value to shareholders,” Gap Inc. CEO Art Peck said in the company’s earnings release in November.

In late 2018, we shopped at Gap and Old Navy. We saw for ourselves why one store was helping Gap Inc. while the other is hurting it.

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The first store we went to was Gap, in New York’s Financial District. There were two large 50%-off signs in the entryway.

The first store we went to was Gap, in New York's Financial District. There were two large 50%-off signs in the entryway. Business Insider/Jessica Tyler

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Women’s clothing was on the first floor.

Women's clothing was on the first floor. Business Insider/Jessica Tyler

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There were a lot of plain sweaters for sale …

There were a lot of plain sweaters for sale ... Business Insider/Jessica Tyler

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… but they weren’t cheap. Most sweaters cost around $60, and a lot of the styles seemed to be very similar to each other.

... but they weren't cheap. Most sweaters cost around $60, and a lot of the styles seemed to be very similar to each other. Business Insider/Jessica Tyler

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It wasn’t just the sweaters that were pricey. A pair of pants cost $70.

It wasn't just the sweaters that were pricey. A pair of pants cost $70. Business Insider/Jessica Tyler

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However, a ton of women’s clothes were on sale for $20.

However, a ton of women's clothes were on sale for $20. Business Insider/Jessica Tyler

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And many basics were on sale for even less than that.

And many basics were on sale for even less than that. Business Insider/Jessica Tyler

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Luckily for shoppers, nearly everything in store was 50% off when we visited.

Luckily for shoppers, nearly everything in store was 50% off when we visited. Business Insider/Jessica Tyler

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Although the sales are good for shoppers, they are threatening margins at Gap and, ultimately, making shoppers less likely to pay full price when the sales go away.

Although the sales are good for shoppers, they are threatening margins at Gap and, ultimately, making shoppers less likely to pay full price when the sales go away. Business Insider/Jessica Tyler

Read more: Gap is doubling down on one of retail’s deadliest mistakes

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The back of the first floor carried sleepwear, bras and underwear, slippers, and sweatshirts.

The back of the first floor carried sleepwear, bras and underwear, slippers, and sweatshirts. Business Insider/Jessica Tyler

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There was also activewear, although half of the department was just lightweight coats. There wasn’t very much activewear to choose from.

There was also activewear, although half of the department was just lightweight coats. There wasn't very much activewear to choose from. Business Insider/Jessica Tyler

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There was a sale rack reading “$11.99 & up,” but the first thing I pulled off the rack was $89.95.

There was a sale rack reading Business Insider/Jessica Tyler

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The clearance prices didn’t seem much cheaper than the original prices in most cases.

The clearance prices didn't seem much cheaper than the original prices in most cases. Business Insider/Jessica Tyler

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Downstairs was a men’s section that had similar prices …

Downstairs was a men's...