Gap Inc. is cutting approximately 500 corporate jobs across its New York, San Francisco and Asia offices.
A spokesperson confirmed the San Francisco owner of the Gap, Athleta, Old Navy and Banana Republic brands is both laying off staff and eliminating open positions across a range of departments, as the Wall Street Journal first reported Tuesday. Some employees have been notified of the layoffs in recent days.
The retailer first alluded to cost cuts in its Aug. 26 second-quarter earnings call, when chief financial officer Katrina O’Connell said the company would reduce overhead investments, including “a pause on planned hiring and open positions, among other actions.”
The cuts add to the layoffs sweeping across the apparel retail sector in the wake of a rocky macroeconomic climate and concerns of a potential recession. At the end of August, VF Corp. confirmed it cut approximately 300 corporate jobs and another 300 open roles, while beleaguered Bed Bath & Beyond said it was slashing its corporate and supply chain positions by 20 percent. At the same time, Tommy Hilfiger and Calvin Klein owner PVH said it would be cutting at least 10 percent of “people costs” by the end of 2023.
Although Gap Inc. had been foundering in recent years, the company attempted a turnaround in late 2020 under the leadership of CEO Sonia Syngal, who was elevated to the role in March that year. But after the Covid-19 pandemic and ensuing supply chain constraints led to a flurry of inventory delays, and millions lost in sales, Syngal stepped down from the position.
The inventory imbalance even forced Old Navy to dial down its size-inclusive Bodequality campaign due to an overabundance of smaller and bigger sizes, while middle sizes sold out too quickly. Old Navy’s sales in the second quarter dipped 13 percent to $2.1 billion, representing 54.4 percent of Gap Inc.’s total net sales.
“We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability,” Bob Martin, Gap’s executive chairman and interim CEO, wrote in a memo to employees on Tuesday informing them of the job cuts, according to a copy reviewed by the WSJ.
The financial frustrations at Gap Inc. have yet to ease, with second-quarter net sales falling 8 percent to $3.86 billion on a $49 million net loss. The combination of the CEO departure, external economic and inflationary factors and the disappointing quarterly performance led the company to withdraw its fiscal 2022 outlook.
However, outside of the company’s retail performance, Gap Inc. is burning through its cash reserves. The…