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April 26, 2023 : Clothing retailer Gap is cutting over 500 jobs as part of its ongoing restructuring efforts to reduce costs and improve efficiency. The job cuts are expected to result in $300 million in savings, with the first half expected in fiscal 2023. The company’s chairman and interim CEO, Bob Martin, told employees last week that the goal was to flatten the organization, increase spans of control, decrease layers, and empower individuals to make better, faster decisions. Gap’s shares fell about 6% following the news of the layoffs.
This move follows a September announcement that the company would cut about 500 corporate positions. Martin had told investors in March that a complicated organizational structure, bureaucracy, and outdated processes had held back the company’s staff. He said that the restructuring effort aimed to improve the quality and speed of decision-making.
The company has struggled with a drop in sales, bloated inventory levels, and a search for a permanent CEO. Gap’s restructuring efforts have also led to the departure of Athleta’s CEO, Mary Beth Laughton, and the planned exit of Chief People Officer Sheila Peters at the end of the year. In the three months ending on January 28, Gap reported $4.24 billion in sales but a net loss of $273 million or 75 cents per share. The company turned an annual net profit in 2021 but reported net losses in 2020 and 2022.
Impacted employees in Gap’s international sourcing division were notified on April 18, while those at its San Francisco headquarters will be notified this week. Members of the finance team who will be laid off will be told in late May. As of January 28, Gap employed about 95,000 staff members, 81% working in retail locations.
