Image source: The Business of Fashion
The Gap is among the most well-known clothing brands in the industry, but it has suffered significant losses alongside other companies.
This year, inflation has dealt a major blow to the retail clothing industry, prompting many to make difficult decisions and letting employees go.
While other companies have laid off their in-shop employees, the Gap has made a significant decision to eliminate corporate jobs.
Over 500 corporate jobs are getting eliminated from the company, which is only one factor that the retailer is facing.
According to several outlets, the cuts cover a series of layoffs and open roles getting axed at the Gap’s corporate offices.
In the United States, New York and San Francisco offices are dealing with eliminations while the same thing is being done across Asia.
According to Wall Street, the layoffs started recently, amounting to roughly 5% of the Gap’s 8,700 corporate employees.
Impact of sales
The layoffs come months after the Gap shared reports of weak first quarter earnings.
The majority of the sales slid at its flagship brand and the popular Old Navy chain.
In July, the Gap announced CEO Sonia Syngal was stepping down after less than three years in the position.
An interim CEO would take her place as the company sought a permanent leader.
Reaction to the layoffs
GlobalData managing director Neil Saunders made an analyst note, writing that the decision was practical.
He cited that the company’s slowing sales and shrinking retail footprint were factors to the decision.
Saunders also noted that Old Navy (the Gap’s more popular chain) was no longer as strong as it used to be to boost the company’s bottom line.
“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 terminating his two-year-old partnership with the Gap, citing “substantial noncompliance.”
Among other issues, Ye alleged that the retailer breached their partnership by failing to open branded Yeezy stores and distributing his apparel – an agreement they initially met.
Gap (GPS) also confirmed it was winding down the partnership.
Meanwhile, shares of the Gap fell by nearly 3% in Tuesday trading as stocks went down by 50% for the year.
Opinions expressed by NY Weekly contributors are their own.