Gap to Lay Off 1,800 Employees as Part of Restructuring
Gap will lay off about 1,800 employees, more than three times as many as the 500 layoffs it announced in September, as part of a broad effort to cut costs and streamline operations, the company said Thursday. The layoffs will affect roles at Gap’s headquarters locations along with upper field positions, or workers such as regional store leaders who hold leadership titles outside of a headquarters office, the company said. CNBC reported Tuesday that the company would lay off more than 500 employees. The layoffs are expected to result in annualized savings of $300 million, Gap’s interim CEO, Bob Martin, said in a statement.
Total Retail's Take: Gap Inc. is taking the hard but seemingly necessary step of reducing headcount as a means to offset declining sales. In the three months that ended Jan. 28, Gap posted $4.24 billion in sales — a 6 percent decrease from the prior-year period — and a net loss of $273 million. And this isn't a recent trend; the retailer reported annual net losses in both 2020 and 2022.
In addition to realizing cost savings, Gap Inc. is making the concerted effort to decrease management layers across the organization, which it believes will allow its brands to remove process bottlenecks and make better, faster decisions. Like many other legacy brick-and-mortar retailers, particularly those in the apparel sector, Gap Inc. needs to become more agile across its operations, from supply chain to product development to marketing, to better meet the evolving needs of omnichannel shoppers. Hopefully this challenging time and the hard decisions made during it will lead to a more prosperous future for the business.
Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.