The company, which also operates the Banana Republic and Athleta chains, decided that spinning off Old Navy no longer made sense.

"Our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation," said interim Chief Executive Robert Fisher in a statement.

Gap in February 2019 had announced plans to spin off Old Navy, leaving the Gap, Banana Republic and other brands in a second unnamed "Newco."

But Gap's financial performance has continued to struggle since that time, leading to the November exit of Art Peck as CEO.

Gap said Thursday it plans to appoint a new CEO and that it has given additional responsibilities to other senior leaders.

Founded in 1969 in San Francisco and long identified with denim and trendy garb, Gap has struggled in recent years to keep up with shifting fashion tastes and as e-commerce has roiled the retail industry.

The company's work on the Old Navy spinoff "shone a bright light on operational inefficiencies and areas for improvement," Fisher said, adding that management is committed to a "more rigorous and transformational manner that empowers our growth brands."

Shares of Gap jumped 6.7 percent to $19.86 in after-hours trading.