Gap to Cut More than 500 Jobs in Restructuring Effort

Gap to Cut More than 500 Jobs in Restructuring Effort

Gap is set to lay off over 500 employees in a bid to reduce costs and streamline its operations, according to sources who spoke to CNBC. The exact number of job cuts is not yet known, but it is believed to be larger than the 500 corporate positions that the company announced last September. The move is part of Gap’s efforts to become more efficient and to return to profitability.

Bob Martin, Chairman and interim CEO of Gap, said that the company’s aim was to create more robust roles and empower individuals while reducing management layers to remove bottlenecks and speed up decision-making. He added that the restructuring would result in $300 million in savings, with the first half of this figure expected to be achieved in fiscal 2023.

The company’s shares fell by approximately 6% on the day news of the layoffs broke. The stock has fallen more than 16% this year.

This latest round of layoffs comes after Martin told investors in March that the company’s staff was being held back by a complicated organizational structure, bureaucracy, and outdated processes. He stated that Gap planned to reduce management layers in a bid to improve decision-making.

Gap has not disclosed the total number of positions that will be cut as part of the overall restructuring, but the company has previously said that it will eliminate its chief growth officer position, previously held by Asheesh Saksena. Athleta’s CEO, Mary Beth Laughton, has also left the company, while Chief People Officer Sheila Peters plans to exit her role at the end of the year.

Gap’s international sourcing division was informed about the latest cuts on April 18, while employees at the company’s San Francisco headquarters will be notified this week. Members of the finance team who will be laid off will be told in late May.

The apparel retailer, which includes brands such as Old Navy, Banana Republic, and Athleta, has had a difficult year, struggling with a drop in sales, bloated inventory levels, and a search for a permanent CEO. In the three months that ended Jan. 28, Gap posted $4.24 billion in sales but reported a net loss of $273 million, or 75 cents a share. The company managed to turn a net profit in 2021 but reported net losses in both 2020 and 2022. As of Jan. 28, Gap employed around 95,000 staff members, with 81% working in retail locations.

Business

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