KEY POINTS
- Gap eliminated 500 positions at its San Francisco, New York and Asia offices last year
- The current round is expected to be larger than that
- It incurred a loss of approximately $49 million in the second quarter of 2022
Apparel retailer Gap is reportedly downsizing its global corporate workforce by laying off hundreds of employees.
The current round of job cuts is projected to surpass its previous round, which saw approximately 500 corporate roles being eliminated last September, sources familiar with the matter told WSJ.
It eliminated 500 positions in its San Francisco, New York and Asia offices in September 2022 as the company faced challenges with declining sales. It incurred a loss of approximately $49 million in the second quarter last year, which also coincided with the unexpected departure of its CEO, Sonia Syngal, who served at the company for two and a half years.
The San Francisco-headquartered clothing retailer owns the Old Navy, Gap, Banana Republic and Athleta brands. The executives in charge of the brands are said to be thoroughly assessing operational efficiencies. Gap said the main aim was to eliminate redundant managerial positions to expedite the decision-making process.
Employees at the international sourcing division were reportedly informed about the company’s intentions on April 18. The management is expected to notify the San Francisco headquarters staff about the possibility of future layoffs this week.
“Our goal is to flatten the organization, increase spans of control to create more robust roles and individual empowerment, and decrease layers to remove bottlenecks and make better, faster decisions,” Bob Martin, Gap’s chairman and interim CEO, told employees in a memo last week, the report said.
During an earnings call in March, Martin said the projected job cuts were anticipated to generate an annual savings of $300 million for the company, with approximately half of the savings expected to be achieved within this fiscal year.
Subsequently, the apparel retailer eliminated the position of chief growth officer, held by Asheesh Saksena, and also fired the CEO of Athleta, Mary Beth Laughton. Sheila Peters, the chief people officer, is expected to leave the company at the end of the year.
The current wave of job cuts has caused concern among market observers, particularly in the technology sector, as they see it as an indication of a sluggish economy. Several non-tech companies, including consumer goods specialist Clorox and online furniture retailer Wayfair, have also been forced to eliminate positions.
Gap’s decision to downsize its workforce comes at a time when consumers are reducing expenses on discretionary items and essential goods. The development further compounds the challenges faced by the company.
