Gap Inc. Getting Rid of 1,800 Jobs

Gap Inc.’s corporate overhaul will put another 1,800 employees out of a job.

The cuts amount to 1.9 percent of the San Francisco apparel company’s 95,000-employee global workforce, according to data from Jan. 28, 2022. The owner of Athleta, Banana Republic, Old Navy and the namesake Gap brand first reported the new layoffs on Tuesday before confirming the number of affected roles on Thursday.

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“We are taking the necessary actions to reshape Gap Inc. for the future—simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience,” Bob Martin, Gap’s executive chairman and interim CEO, said. “These changes include the consistent brand leadership structures we announced last month aimed at flattening the organizational structure to improve the quality and speed of decision-making, while in turn reducing overhead expense.”

The company should be finished shedding these roles by the end of July, according to a Thursday regulatory filing with the Securities and Exchange Commission.

Martin said headquarters and “upper field” positions will account for the 1,800 job cuts.

Eighty-one percent of Gap Inc. employees work in retail locations, 9 percent in headquarters and 10 percent in distribution centers. In addition, 81 percent of staff were located in the U.S. Most of the non-U.S. workers are in Canada and Asia.

“As we move forward, we believe these efforts will release untapped potential across our brands, allowing us to show up as a more customer focused, faster, and creative company,” Martin said.

The company expects the cuts to save $300 million, half of which it should see this year. That’s on top of the $250 million in annual savings projected from last September’s layoffs. This week’s layoffs will result in restructuring charges estimated at $100 million to $120 million in aggregate pre-tax costs, consisting of between $75 million to $85 million in employee-related costs and $25 million to $35 million in consulting and other associated costs.

The headcount reductions are on top of the 500 jobs cut in September, mostly from Gap’s offices in San Francisco and New York. The reach of the latest eliminations go far deeper and impact the global workforce. SJ learned earlier this week that the restructuring plan is aimed at reshaping the company from the “ground up.” Senior-level executives who left the company in March include chief growth officer Asheesh Saksena and Athleta president and CEO Mary Beth Laughton. Gap’s chief people officer Sheila Peters is set to leave at the end of the year.

Over the years, Gap has struggled to become profitable.

Following the initial Covid outbreak, Gap said in August 2020 that it would close more than 225 unprofitable Gap and Banana Republic doors as part of a global restructuring. That was on top of the 90 store closings announced earlier in 2020. By October 2020, Gap began shedding assets across the pond.

Then the apparel giant said it was pursuing a franchise model in lieu of a company-operated store approach. Soon after it said it would close 19 stores across the U.K. and Ireland and recruited Next Plc as its joint venture franchise partner, resulting in the closure of all 81 company-operated Gap and Gap Outlet locations. Next now sells Gap product on its website and has Gap-branded shop-in-shops at its flagship locations.

A few months later, the company transferred its Gap stores in Italy to OVS to run as a franchise model, and Hermione People & Brands—owned by French business man Michel Ohayon for FIB Group (Financière Immobilière Bordelaise) took over the operation of Gap stores in France under a franchise agreement. The current status of the French operation isn’t immediately clear, following a French court’s placement of Gap France into receivership on March 1. The receivership is a result of the turmoil connected to the Ohayon’s business empire.

Gap in November signed a $40 million deal to sell its Greater China business to Chinese c-commerce service provider Baozun Inc.

For the fourth quarter ended Jan. 28, Gap’s net loss widened to $273 million on a 6 percent decline in net sales to $4.24 billion. The year-ago net loss was $16 million on net sales of $4.53 billion.

The layoffs at Gap come after Saks.comKohl’sEBayNeiman Marcus and Walmart have all cut jobs recently. David’s Bridal and Bed Bath & Beyond‘s bankruptcies this month will also eliminate thousands of retail jobs.

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