Image source: The Business of Fashion
The Gap is one of the best-known clothing brands in the industry, but has suffered significant losses alongside other clothing companies.
This year, inflation has dealt a severe blow to the apparel retail sector, forcing many to make tough decisions and let employees go.
While other companies fired their employees at the store, The Gap made the important decision to cut the company’s jobs.
More than 500 corporate jobs are disappearing from the business, which is just one of the factors facing the retailer.
According to several outlets, the cuts will be accompanied by a series of layoffs and vacancies in the Gap offices.
In the US, offices in New York and San Francisco are under threat of layoffs.
Meanwhile, the same is happening across Asia.
According to Wall Street, the layoffs began recently and affected about 5% of Gap’s 8,700 employees.
Sales and management
The layoffs come months after Gap reported weak first-quarter results.
Most of the sales have escaped the flagship brand and the famous Old Navy chain.
In July, The Gap announced that CEO Sonia Syngal would step down after less than three years in office.
An interim CEO will then take her place while the company searches for a permanent replacement.
Reaction to the layoffs
GlobalData director Neil Saunders penned an analyst note saying the decision was the right one.
He cited the company’s declining sales and shrinking retail presence as contributing factors.
Saunders also noted that Old Navy (The Gap’s most popular chain) wasn’t as strong as it used to be when it comes to corporate earnings growth.
“Traditionally, Gap could rely on its old Navy banner to cover some of the sluggishness in other parts of the business,” he wrote.
“However, with the division suffering from supply chain issues and softening demand from the family segment, the whole company is very exposed and needs to take tougher actions to appease investors and present better numbers over the second half of the year.”
Last week, rapper Kanye West announced he was ending his two-year collaboration with The Gap, citing “substantial noncompliance.”
Among other things, Ye claimed that the retailer breached their partnership by not opening Yeezy stores and distributing his clothes, an agreement they originally had.
Gap (GPS) has also confirmed that it will enter into the partnership.
Meanwhile, Gap shares fell nearly 3% in trading on Tuesday, with shares down 50% for the year.