Business In News
Gap is reportedly eliminating approximately 500 corporate jobs, people familiar with the matter told The Wall Street Journal. The layoffs and elimination of open positions, which will mostly affect Gap’s main offices in San Francisco and New York as well as Asia, will help the retailer reduce expenses as it faces declining sales. Gap had about 8,700 employees in headquarters locations as of Jan. 29, 2022, according to company reports.
“We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability,” said Bob Martin, Executive Chairman and interim CEO at Gap in a memo to employees seen by The Wall Street Journal.
In August, Gap reported poor performance for the quarter ending July 30. Net sales fell 8% year-over-year to $3.9 billion, and comparable sales were down 10% for the same period. Inventory also proved to be a problem — Gap ended the quarter with $3.1 billion in inventory across it banners, up 37% year-over-year, and the retailer withdrew its 2022 outlook as it prepared for uncertainty in the second half of the year.
Old Navy in particular struggled, with net sales down 13% and comparable sales down 15%, and the Gap banner’s net sales dropped 10% while global comparable sales fell 7%. Banana Republic was a bright spot, with net sales up 9% and comparable sales up 8%, while Athleta drove a 1% sales increase despite an 8% drop in same-store sales.
Gap also took a hit from Kanye West, who had entered a partnership with the retailer to make clothes under the Yeezy Gap label but then accused the company of breaching their agreement. Gap had redesigned its Times Square flagship in preparation for Yeezy Gap’s brick-and-mortar debut, and some items in the pipeline will still be released, according to people familiar with the matter. The job cuts are reportedly unrelated to the winding down of the partnership.
Gap isn’t the only major retailer to implement layoffs in recent months. In August 2022 alone many companies reduced their overhead , including:
- Walmart laid off 200 corporate employees across the merchandising, global technology and real estate teams to “better position the company for a strong future;”
- Bath & Body Works laid off 130 employees, mostly from leadership roles, in an effort to create organizational efficiencies by simplifying and realigning its operating structure;
- Warby Parker cut 63 corporate jobs, or about 15% of its corporate workforce, noting that “we are making these changes to enable us to operate in a more focused and nimble manner and to capitalize more efficiently on our highest impact opportunities;”
- Wayfair laid off 870 workers, approximately 10% of its corporate employees, as part of a previously announced plan to manage the retailer’s expenses; and
- Bed Bath & Beyond cut 20% of its workforce across the corporate and supply chain divisions and began shuttering 150 lower-producing Bed Bath & Beyond stores following a comp store sales decline of 26%.